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Contracting

Frequently Asked Questions

Q: How does contracting affect impartiality? Aren't ethical codes enough?

A: Any arrangement that threatens the impartiality of court reporters or merely threatens the appearance of impartiality will lead to a breakdown of our justice system. What if the judge in a case of yours was being paid by your opponent in the litigation? Would their oath to be impartial be enough for you? If you lost, would you feel as though you got a fair shake? It is our faith in the impartiality of the judicial system that is the very basis of our Rule of Law and ordered government, and this foundation erodes when the antagonists in litigation--the parties--start directly paying the bills of the allegedly impartial.

Q: Insurance companies and their attorneys say that they have established contracting arrangements with court reporting firms in order to cut the costs of their litigation. Isn't that a good thing?

A: Only if the success of our system of justice is measured solely by how it affects corporate balance sheets. Regardless of whether certain contracting arrangements result in a cost savings to insurers (and there is a lot of evidence that both the short term and long term savings are illusory), the point is that the higher-or, at least, different-aims of the justice system should not be compromised in favor of the bottom line. As the American Judges Association has recognized in a resolution to support legislative and judicial measures prohibiting financial arrangements between court reporters and parties in interest, "court reporters are officers of the court whose impartiality, as with judges, must remain utterly beyond question in order to ensure the enduring confidence and faith from which our judicial system derives its legitimacy." Otherwise, why not simply contract out judges to insurance companies? That would save the taxpayers millions. The reason why such arrangements are offensive to our notions of justice is that, like with health care, while cost isn't irrelevant, neither is it everything. For example, HMOs exist first to cure people. Cost savings methods that conflict with this goal should be forbidden (and are currently under attack everywhere). Likewise, the justice system exists first to provide a neutral, fair forum for the resolution of often bitter disputes. Any payment arrangement that threatens the impartiality of the justice system should likewise be barred.

In other words: everyone wants to save money, but some things are more important than just a cheap price tag. That's true even for companies. How can we tell? Ask a corporation what they pay their CEO . . . and why.

Q: What has been the response of state legislators and rule-makers to anti-contracting proposals?

A: Where state legislatures and state supreme courts have considered anti-contracting legislation and/or rule changes, the trend has been to outlaw or strictly curtail contracting arrangements. So far, twenty-nine states, including Arizona, Arkansas, California, Connecticut, Delaware, Georgia, Hawaii, Illinois, Indiana, Iowa, Kentucky, Louisiana, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Hampshire, New Mexico, North Carolina, Ohio, Oklahoma, Oregon, South Dakota, Tennessee, Texas, Utah, West Virginia, Wisconsin, have enacted legislation, approved rules or taken other official actions through their state board to limit or ban contracting. Presently, at least five other states have anti-contracting legislation or rule changes currently pending before their legislatures or state supreme courts.

Q: What about the argument by proponents of contracting that rather than reducing a court reporter's impartiality, contracting actually does the opposite as it eliminates any personal relationship between the attorney and court reporter?

A: This argument completely ignores the fact that unlike attorneys, corporations have no ethical obligations to the court. The public is often skeptical of politicians because it is inferred that their positions on policy are influenced by the largest contributors to their campaign. The judicial system, since its legitimacy rests upon public faith, cannot tolerate arrangements that could create the same skepticism. Court reporters are professionals with independent codes of ethics. As such, they are responsible to these ethics even above the person paying them and before any other duty.

Q: Isn't a prohibition on contracting an unlawful restraint on trade?

A: Prohibiting parties in interest in litigation from having a direct contractual relationship with court reporters, as officers of the court, is necessary to ensure the public's faith in the integrity and impartiality of the judicial system. If this is an unlawful restraint on trade, then so are:

  • laws prohibiting lawyers from representing parties on both sides in a case
  • laws providing for fair bidding of contracts for state and local governments
  • laws prohibiting politicians from conducting self-dealing financial transactions
  • rules allowing for the challenging of judges for bias

Q: What about antitrust concerns?

A: Lobbying for laws that are aimed at prohibiting certain types of contractual arrangements does not violate anti-trust laws. State governments are free to make any law which is not prohibited under their constitution or is not pre-empted by the U.S. Constitution or federal law. The antitrust laws were designed to prohibit collaboration among businesses in order to keep prices artificially high. The Supreme Court has long recognized under its Noerr-Pennington doctrine that petitioning government to take action, such as is done in lobbying for legislation, regulations, or official rule changes is also insulated from anti-trust laws and is protected.

Q: How is contracting to provide court reporting services for government entities different from contracting with private entities? Should government agencies who are parties to litigation be allowed to contract for court reporting services for litigation purposes?

A: Government agencies are required to comply with Federal statutes and regulations for all procurements, including court reporting services. The federal statute governing government procurements is the Competitions in Contracting Act (CICA) 41 U.S.C. Sect. 251 et. seq. The Federal Acquisitions Regulations are the implementing regulations for CICA. These regulations prescribe policies and procedures to promote full and open competition in the acquisition process, generally through sealed bids or competitive proposals. Because government agencies must comply with these procedures for the procurement of court reporting services, most states that have passed legislation or court rules prohibiting contracting have specifically excluded government agencies from their provisions.

This exemption for government agencies has raised the question as to why private entities should be prohibited from contracting with court reporting firms while government agencies are free to solicit bids. The most important distinguishing factor is that government agencies are ultimately beholden to the general public while private corporations are not. Governments are not responsible to stockholders demanding the highest possible return each quarter. Governments are ultimately responsible to you and me. This means that, where the perception of impartiality is concerned, there is far less of a risk that a losing litigant against the government will view the process as biased even if the same government is paying the reporter. This can be proven: Judges too get paid by the government. Has there been any cry about the bias in that arrangement? Compare that silence with the loud concerns voiced about free lance contracting, and one can easily perceive the difference.

More to the point: if a corporate defendant loses a big case, it could result in a reduction of pay or bonuses, or a reduction in the value of stock options. Likewise, a win in a big lawsuit could enrich the personal bank account of corporate officers by millions. In short, corporate officers stand to gain or lose lots of their own money in litigation. Government officials have no similar, personal stake in the outcome of litigation.

As a practical matter, because it is the taxpayer's money, not their own money, at stake, and because government officials don't face the "bottom line" pressures of stockholder- responsible corporate executives, government contracting poses little if no risk of real or apparent conflicts of interest in most circumstances.

At least one state has taken the position that where government agencies are parties to litigation, they should also be prohibited from directly contracting for court reporting services related to the litigation. In a 1997 advisory opinion, New Mexico's Court Reporter Board sets up a functional capacity test for governmental and quasi-governmental entities. The opinion states that under Rule 22-605(K) NMRA 1996, "a court reporter may contract with a governmental entity, the City of Albuquerque, for example, to report its hearings when the City is acting in an adjudicative, legislative, or administrative capacity. However, when the City of Albuquerque is a litigant and wishes to contract with a court reporter to do all its depositions in Tort Claims Act cases, for example, then that will be considered contracting and will be considered prohibited by Rule 22-605(K)."