Compensating Fact Witnesses: The Price is Sometimes Right

Abstract

Litigation often pivots on the testimony of fact witnesses. Unfortunately, serving as a witness may take people away from their jobs or interrupt their lives. It is therefore understandable that fact witnesses may want to be paid for devoting time to litigation. It was once the rule that fact witness compensation was limited to statutory witness fees. That limitation rested on several factors, including the concern that greater payments could entice fact witnesses to perjure themselves, might simply influence witnesses to shape their testimony in ways favorable to the parties paying them, could price justice out of the reach of some people, and created an appearance of impropriety. On the other hand, fact witnesses may be required to devote considerable time to preparing their testimony and later testifying when called, the vast majority of witnesses faithfully honor their oaths to testify truthfully, and witnesses’ biases can be exposed on cross-examination. In any event, over time, restrictions on witness compensation have loosened. But while restrictions on compensating fact witnesses are looser than they once were, they are not lax. Lawyers and litigants may not pay fact witnesses for their testimony even if it is truthful. The general rule, in short, is that lawyers and litigants may pay witnesses for time spent testifying, preparing to testify, or assisting with the litigation, and may reimburse witnesses’ associated expenses, provided that the amounts paid are reasonable. The general rule has major exceptions, however, as where payments are contingent upon the outcome of the litigation. Furthermore, the reasonableness of payments to fact witnesses is frequently disputed, and, even if payments to fact witnesses are reasonable, additional inducements and failures to disclose compensation-related details may be disastrous. As a result of such missteps, a court may order a new trial, sanction the lawyer or party or both, or disqualify the lawyer. In addition, the lawyer may face professional discipline, and the lawyer, party, and witness all may tempt criminal prosecution. This article examines lawyers’ and litigants’ compensation of fact witnesses, with a primary focus on lawyers’ conduct. After analyzing the issues surrounding fact witness compensation, the article offers practical guidance to lawyers weighing whether and how to compensate fact witnesses.