Third-Party Contracting

Third-Party Contracting

I am a certified court reporter and the owner and operator of Marcus Deposition Reporting, a certified court reporting firm. It is extremely important that I bring awareness to some critical differences between firms like mine, a real court reporting firm that is owned and operated by a court reporter, versus litigation support companies, which are not owned and operated by court reporters; rather, they are owned and operated by investors and individuals that are not court reporters.

One of many controversies surrounding the use of litigation support firms is that they engage in third-party contracts. Pursuant to Civil Code of Procedure 2026, court reporters are not allowed to enter into third-party contracts because we are uninterested, unrelated and unbiased parties.

Court reporters are hired directly by law firms to perform reporting services. A contract between a court reporting agency and an insurance company is a third-party contract. The insurance company is the third party. Insurance companies hire attorneys to represent their interests. Insurance companies pay attorneys. Litigation support agencies will enter into contracts with the insurance company, thereby forcing the law firms, which work for the insurance companies, to use the contracted litigation support agency, diminishing any chance that a legitimate, law-abiding court reporting company may have had to work for said law firm.

By entering into a third-party contract, the litigation support agency offers cost savings to their client, the insurance agency. To make up for the lost revenue, they pass the additional and inflated costs onto opposing counsel or the party that is not affiliated with the litigation support company. This conduct threatens the legitimate court reporting industry because they advertise that their rates are lower, but in reality, they’re just shifting the burden onto others.

In addition to entering into third-party contracting, these litigation support companies also engage in excessive gift-giving. Again, due to the laws that govern our business, CCP 2026, court reporters and court reporting agencies are precluded from and are not allowed to engage in any form of gift-giving over and above $100.

Gift-giving is a method used by litigation support agencies to lure clients to use their services, giving them a false sense of getting a great deal, but it’s quite the opposite — their gifts are not free. NOTHING IS FREE. As a matter of fact, it’s a “smoke and mirrors” game followed by the “bait and switch.” It is known throughout the industry that these third-party contracting companies engage in higher billing, hidden fees and cost shifting.

• Cost-Shifting: Offering low original transcript page rate to noticing party and shifting the cost of the services to other parties in the matter by charging higher page rates for certified transcript copies, thereby shifting cost of the litigation from one party to others to make up for lost revenue.

Cost shifting violates the following code.

• CCP 2025.220(5): “Any party or attorney requesting the provision of the instant visual display of testimony, or rough draft transcripts, shall pay the reasonable cost of those services, which may not be greater than the costs charged to any other party or attorney.”

New Legislation (January 2016):

• Law firms must disclose in a Deposition Notice any financial agreements they have with the reporting agency. Sponsored AB-1197 (Bonilla), allowing attorneys to object to the use of a contracted reporting firm up to three days before the onset of the deposition.

• Higher Billing and Hidden Fees:

Higher Page Rates
Higher Certification Fees
Higher Processing and Handling Fees
Higher Exhibit Fees
Parking
Mileage
Lodging
Wait Time
Overhead
After-Hours Fee
Extra Equipment Fee
Filing Fees
Emailing Fees
Formatting Fees….

For the past 30 years, California Court Reporters Association (CCRA) has opposed contracting by reporting firms who give favorable rates and terms to one party, shifting the actual costs to the non-noticing party. As a result, these firms drive compensation for court reporters downward because these large reporting corporations force their competitors, CSR-owned deposition firms, out of business and become the only employer in town in some areas. Our industry has long warned that this contracting practice violated the reporter’s ethical obligation to be fair and impartial to all parties. These court reporting agencies that are not owned and operated by licensed certified court reporters cannot be mandated by the Court Reporters Board (CRB), and they do not follow Code of Civil Procedure.

Court reporting companies that are owned and operated by licensed certified court reporters provide you with excellent, fair and unbiased service without inflating costs to you or anyone else. Court reporting companies that are owned and operated by licensed certified court reporters are the safest and surest bet for meeting your court reporting needs.

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