Defense Counsel Liable for Deposition Transcript Fees Where Insurer Bankrupt

Saturday, February 24, 2007 | 0

By Larry Rogak

H&B Reporting Co. Inc. v. Galvano & Xanthakis PC, SCR 60491/06 (Civil Court, Richmond County) (Philip S. Straniere, j)

In a situation that any insurance defense counsel can sympathize with, a Manhattan law firm has been held responsible for court reporter fees that should have been paid by the insurance carrier who hired them.

H&B Reporting Company, Inc. commenced this small claims action against the defendant Galvano & Xantakis, PC, alleging that the defendants failed to pay for reporting services at a deposition. A trial was held on November 30, 3006.

The Court wrote in its decision, "Claimant testified that it was hired by a group of lawyers to take testimony at an examination before trial in Nassau County on June 22, 2006 when the scheduled reporter failed to appear. Claimant billed the five law firms that participated. The other four firms paid the bill, defendant has refused."

"Defendant asserts that it was appearing on behalf of Shelby Insurance to defend one of its clients and that Shelby Insurance has filed for bankruptcy and defendants will apparently not be reimbursed if they pay this bill. Defendant contends that the case law does not require the attorney to pay these fees incurred on behalf of a client since the attorney is only an agent."

"Claimant asserts that General Business Law 399-cc is applicable. This statute originally effective November 15, 2005 was amended effective July 26, 2006 and provides: 'Notwithstanding any provision of law to the contrary, when an attorney of record orders or requests either orally or in writing that a stenographic record be made of any judicial proceeding, deposition, statement or interview of a party in a proceeding or of a witness related to such proceeding, it shall be the responsibility of such attorney to pay for the services and costs of such record except where: 1. payment is otherwise provided by law or where the attorney is providing representation through a not-for- profit provider of criminal or civil legal services; or 2. the attorney expressly disclaims responsibility for payment of the stenographic service or record in writing at the time the attorney orders or requests that the record be made.'"

"The statute's intent to make the attorney responsible for the stenographic costs was not changed by the amendment of 2006."

"Judgment for claimant. Claimant has established that the defendant agreed to participate in the deposition. At that time defendant never indicated that it would not be liable for the cost as required by the statute, nor were its services being provided for a not-for-profit as designated under the statute. Defendant is responsible for the stenography bill. It has to collect from its client. Judgment for claimant in the amount of $354.96 with interest from the date of judgment, costs and disbursements."

Comment: I definitely sympathize with an insurance defense firm that gets stuck paying out of pocket expenses when a carrier goes belly-up. I would imagine that this firm got stiffed on its legal fees as well. On the other hand, a court reporting firm is entitled to be paid for the work it performs, too. And what of the policyholder who paid a premium for defense and indemnity? It's a lose-lose situation for all involved.

The only way for such a law firm to protect itself is to put a statement on the record, as per the statute, that the insurer, and not the law firm, will be responsible for payment of the court reporter's fees.

Lawrence N. Rogak is an insurance defense attorney in New York. He writes The Rogak Report, a daily insurance law newsletter, and his insurance law articles appear in several industry publications. For more information see www.Rogak.com.

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