Ethics First and Gift Giving

What NCRA cannot do in connection with gift giving

It is important to remember that NCRA is a voluntary membership organization of individuals. As such, relying exclusively on enforcement-based actions has been ineffective in dealing with those who are not reporters and those who are not members. The Ethics First campaign recognizes this reality. In thinking about the issue of gift giving, it is important to know that there are limits to what NCRA can do in this area.

NCRA does not:

1. Enforce any state’s laws or rules. That is up to the individual state. However, NCRA can and does advocate for new laws at the state and federal levels.
2. Have a category of membership for firm owners. If an individual NCRA member is a firm owner and NCRA should find that the individual firm owner is engaged in activity that violates the NCRA Code of Professional Ethics, NCRA could take disciplinary steps, including revocation of NCRA membership. It is important to realize, however, that this may not stop or alter the firm or firm owner’s behavior.
3. Create ethical guidelines that supersede any state or local laws.
4. Have an investigatory arm. NCRA’s Committee on Professional Ethics studies facts as presented and reaches a conclusion. NCRA’s Board of Directors acts as the final decision-maker where complaints are decided. Neither the Committee nor the Board represents the complainant nor the party complained against.
5. Seek out potential ethics violations on its own initiative. NCRA responds to complaints from the public or other NCRA members. Someone needs to make a specific allegation that an NCRA member has violated the Code of Professional Ethics and present evidence in support of that allegation. Then the member who is the subject of the complaint has an opportunity to respond to the evidence, rebut the evidence presented, and offer evidence supporting his or her position. Only after both sides are given an opportunity to respond does NCRA reach a decision.
6. Impose monetary fines.
7. Create ethics guidelines that can in any way be construed as unreasonably restraining trade or otherwise violating the federal antitrust laws.

Court reporters, clients, and gift giving – information for clients

The following information can be used to create an information sheet to share with attorneys at depositions, included as an envelope stuffer, etc. 

For your information, Counselor:

• DID YOU KNOW — that incentives, gifts, and rebate programs are being offered by court reporting firms to influence the hiring decision?
• DID YOU KNOW — that reporting firms who give valuable gifts are not following the National Court Reporters Code of Professional Ethics, which states any gift, incentive, reward, or anything of value is not to exceed $150 in the aggregate per recipient each year?
• DID YOU KNOW — that the amount of these gifts may be considered by the IRS to be revenue to you and create a taxable event to the recipient, whether it be a lawyer, legal assistant, or any other employee of the law firm?
• DID YOU KNOW — that a reporter or deposition firm who gives gifts to a law firm that exceed $600 would be required to provide an IRS information return to that recipient law firm?

Protect yourself and your client. Hire a reporter based on skill and experience who puts ethics first.

Court reporters clients and gift giving talking points

Here are messages for you to share when talking with clients about gift giving:

Similar to attorneys, judges, paralegals, and other legal professions, members of the National Court Reporters Association must abide by a very strict Code of Professional Ethics. One of the most important provisions states that all members must:

“Refrain from giving, directly or indirectly, any gift or anything of value to attorneys or their staff, other clients or their staff, or any other persons or entities associated with any litigation, which exceeds $150 in the aggregate per recipient each year. Nothing offered in exchange for future work is permissible, regardless of its value.”

The purpose of this provision is to avoid the possible appearance of partiality or favoritism on the part of a reporter.

The practice of providing incentive gifts to attorneys, clients, or representatives of clients dilutes the integrity of the legal profession as well as the status of the court reporter as a neutral and impartial officer of the court.

NCRA created the Ethics First program as a positive and proactive effort to encourage court reporters, firms, and the clients that they serve to promote the impartiality and neutrality of the court reporting profession and avoid even the appearance of impropriety concerning inappropriate gift giving.

The American Bar Association has also noted the potential problem with law firms receiving incentive gifts related to litigation. A 1993 ABA formal opinion reads:

“In the absence of disclosure to the contrary… if a lawyer receives a discounted rate from a third-party provider, it would be improper if she did not pass along the benefit of the discount to her client rather than charge the client the full rate and reserve the profit to herself.”

HansonBridgett, a large Northern California law firm, noted that there are implications with any gift giving. They found that firms that do give extravagant gifts need to file 1099 forms to recipients. HansonBrigett concluded:

“Incentives distributed to employees of law firms by Reporting Firms in exchange for bookings are not gifts. These incentives clearly represent income and must be reported by somebody, depending upon who the IRS deems the recipient to be. Aside from the ethical and professional prohibitions against these incentives, both recipients and the Reporting Firms risk potentially serious tax consequences, depending on the value of the incentives.”

Court reporters serve a critical role in maintaining the integrity of the judicial system by serving as an unbiased officer of the court. Incentive gift giving can degrade that neutrality, potentially hurting public faith in America’s judicial norms as well as debasing this time-tested requirement that the court reporter remain impartial to all sides in a proceeding.

Ethics First sample language for law firms

Sample firm policy regarding accepting gifts

Effective immediately, no employee may accept, use, or pass on to another person any incentive gift, favor, gratuity, or entertainment given by vendors in order to influence a business transaction or to initiate a business relationship where one did not previously exist.

Experience has shown that the relationship between law firms and vendors must be safeguarded such that the appearance of impropriety must be avoided. Incentive gifts of any amount are not permitted. Excessive gifts above $100 per vendor per year are also not permitted not including nominal marketing gifts defined as less than $10 provided the spirit of the $100 limit is adhered to.

Sample email to firm employees

Incentive programs have the appearance of impropriety and should not play any part in choosing one court reporting service over another.  Such offers could actually be viewed as a form of kickback.  As I become aware of the companies involved in this practice, I will be instructing them to immediately cease sending such incentive promotions to [Firm] employees and will tell them that continuing to send such materials will be counterproductive to any continuing business relationship.

Effective immediately, no employee may accept, use or pass on to another person cash value gift certificates of the type described above from court reporting services or other vendors with whom we do business above a $100 per year limit.  Our clients should expect us to choose our vendors solely for reasons that benefit them, such as quality of service and price competitiveness.  Choosing vendors, or even appearing to do so, for reasons such as who gives the best gift certificates, is simply unacceptable. Nominal marketing gifts defined as less than $10 are still permitted although the spirit to the $100 limit must be adhered to.