Inside and outside lawyers representing companies in litigation or investigations will be familiar with the problem of a former employee or other fact witness who, following receipt of a deposition or trial subpoena or a less formal request to make himself/herself available, asks to be compensated. For most litigators, the usual and visceral response is “no,” out of concern about both the legality of such compensation and the strategic implications for the case and the witness’ credibility. Indeed, in our experience, compensating fact witnesses for their time is a highly unusual if not almost unheard of occurrence.
That said, for the rare and exceptional situation when the only way to secure the cooperation and/or testimony of an important fact witness may be to compensate him or her, it is important to understand that, while lawyers must proceed with great caution and care, the applicable legal and ethical rules in New York and in many (but not all) other jurisdictions do afford litigants some latitude to reasonably compensate nonparty fact witnesses for time spent preparing to testify, assisting counsel, and/or testifying, and for related expenses.
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