Ethics First

Ethics First Video for Attorneys and Staff: Click Here to View

Advisory opinions from NCRA COPE:

PUBLIC ADVISORY OPINION NO. 45 (originally adopted in 2009, amended in 2011)

Guidance on Gift Giving Rules (Provision No. 8)

Statement of Facts

The NCRA Board of Directors asked the Committee on Professional Ethics to amend Provision 8 to prohibit all incentive gifts or rewards offered in exchange for future work. This request came from the Board after NCSA adopted a single resolution based on identical resolutions submitted by seven states making this same request.

In March, 2011, COPE presented its recommended changes to the Board. The Board adopted the following new language of Provision 8: 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 $100 in the aggregate per recipient each year. Nothing offered in exchange for future work is permissible, regardless of its value. Pro bono services as defined by the NCRA Guidelines for Professional Practice or by applicable state and local laws, rules and regulations are permissible in any amount.

Discussion Purpose of the Provision:

The Association adopted the restrictions contained in Provision No. 8 because the practice of giving items of value to attorneys, clients, or their staff could create in the eyes of the public the appearance that the reporter or firm holds some partiality or favoritism toward the recipient. As such, these practices undermine and dilute the integrity of the reporting profession and the status of the reporter as a neutral and impartial officer of the court.

What is a Gift?

As in the rules governing the United States Congress, the term “gift” is defined broadly to include any item, gratuity, favor, entertainment, hospitality or other item having monetary value. This includes “points” or “credits” that may be exchanged by the recipient for something of value.

From its adoption in 1993, Provision No. 8 has recognized that gifts of nominal value such as pens, pencils, coffee mugs, and other advertising paraphernalia -or modest forms of meals and entertainment, do not compromise the reporter or firm’s appearance of impartiality and are permissible. However, NCRA has now chosen to distinguish gifts that are for marketing purposes, or to thank clients for past work, versus gifts that are given in exchange for future work. For the purposes of this opinion, these two types of gifts will be referred to as “thank you” gifts and “incentive” gifts.

What is the Value of a Gift?

The amount of a gift is measured by its retail or fair market value. That is, what the recipient would reasonably expect to pay if they were to purchase the gift for themselves from generally accessible sources. The actual cost incurred by the firm or individual providing the gift is irrelevant.

What is the $100 Aggregate Limit?

Marketing or thank you gifts that do not exceed $100 in aggregate value, per recipient, per year are considered nominal and are permissible. Items with a value of less than $10 do not count toward the annual limit.

These aggregate limits apply to the individual or entity that is the recipient and beneficiary of the thank you gift.

Pro Bono Services are allowed. Provision No. 8 also recognizes an exception allowing for members to provide pro bono services as defined by the “NCRA Guidelines for Professional Practice” or by applicable state and local laws, rules and regulations.

Adhering to the Spirit of the Rule:

Members must adhere to the spirit as well as the letter of the rule regarding gift giving and avoiding the appearance of impropriety. For example, to repeatedly give gifts valued at under $10 to the same recipient in order to exceed the $100 aggregate limit would violate the spirit of the provision and hence be impermissible. Elaborate or complicated schemes to obfuscate the value of gifts offered or to direct gifts to a single recipient through different staff members from the same firm in order to exceed the limits of Provision No. 8 would similarly violate the spirit of the rule and be impermissible.

Complaint Process:

Allegations of violations of Provision No. 8 of the Code will be considered and adjudicated using the standard procedures and due process protections contained in the COPE Complaint Procedures. http://ncraonline.org/AboutNCRA/cope/Complaint/

The Committee on Professional Ethics may find a violation of the Code based upon the above factors.

Pursuant to the Complaint Procedures and NCRA’s Constitution and Bylaws, following the filing and consideration of a complaint, the Committee shall prepare a written decision containing its findings of fact and conclusions. It may issue a cautionary letter, warning or statement of advice to the Member, require remedial ethics training, order that the Member be reprimanded, or determine that the Member be suspended or expelled from the Association, depending upon the severity of the violation, prior history and other relevant circumstances. If a Member resigns from NCRA while a complaint is pending, COPE will still complete its determination of the matter.

NCRA is extremely sensitive to its obligation to ensure that nothing in the Code infringes upon a member’s ability to make independent business decisions or otherwise raises antitrust concerns. By way of clarification, the Committee notes that Provision No. 8 is not designed to prevent or deter members competing with each other, such as offering volume or price discounting of their reporting services. The purpose of the gift giving restrictions is to discourage practices that in the past have undermined the critical role court reporters play as impartial and neutral officers of the court, not to inhibit legitimate forms of price and other business competition. These restrictions are similar in scope and nature to those placed on other professions both within and outside the legal field. These restrictions have been in place since 1993 and have been reviewed by the U. S. Federal Trade Commission. NCRA satisfied the FTC that the reasonable limits the provision places upon the profession are appropriate.

This Advisory Opinion No. 45 amends and supersedes Advisory Opinion No. 27.

THIS PUBLIC ADVISORY OPINION REFLECTS THE STATUS OF THE LAW IN MOST JURISDICTIONS. MEMBERS ARE REQUIRED TO CONFORM TO THE ACCEPTED PRACTICES SET FORTH IN THIS PUBLIC ADVISORY OPINION TO THE EXTENT THAT SUCH PRACTICES ARE CONSISTENT WITH THEIR OWN APPLICABLE STATE AND LOCAL LAWS, RULES AND REGULATIONS.

ADVISORY OPINION NO. 46

Further Guidance on Gift Giving Rules

Statement of Facts

The NCRA Board of Directors has requested that the Committee on Professional Ethics address several fact scenarios involving gift giving in order to provide guidance to NCRA Members on complying with the new rules.

Scenario 1

A court reporter makes a presentation at a luncheon put on by the local paralegal association. The reporter takes business cards from the attendees and at the end of the presentation draws a card and gives a gift certificate valued at $150 to a local spa. Is this a violation of the gift giving rules? Would it make a difference if the value was $100?

Discussion

Provision 8 of the NCRA Code of Professional Ethics provides in part that a Member shall “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 $100 in the aggregate per recipient each year. Nothing offered in exchange for future work is permissible, regardless of its value.”

In this situation, COPE determines that this promotion is governed by Provision 8 and therefore the amount of the gift is relevant. A prize offered in a drawing or game of chance falls under the same $100 limitation as a gift given to an individual. Therefore, the $150 spa certificate would be a violation because it is greater than $100.

Should the reporter decide to give a gift to each participant, this would also be viewed as a gift for marketing purposes and the $100 in aggregate, per individual, per year limit would apply. Therefore, they could give a gift to each attendee, but it must not exceed $100 to each attendee.

Scenario 2

This is a variation on Scenario 1 where a reporter offers to its current clients a coffee and muffin breakfast for the firm. Assuming that the average coffee and muffin breakfast costs $3.00, and they are giving them to the entire office staff of 40 people, have they violated Provision 8 because the total gift to the firm is $120?

Discussion

If it is possible to quantify that the gift is for individual staff – in this case, a cup of coffee and a muffin for each staff person – then COPE has determined that this scenario is not in violation of the Code. Since it is less than $10, it is a nominal gift to each person and doesn’t count against the $100 limit. However, something that would be for the whole firm, i.e. a holiday gift basket, COPE would look to the value of the gift basket, which should not exceed $100.

Scenario 3

In the context of marketing court reporting services to a potential new client, the reporter invites an attorney for a cup of coffee at the local coffee shop to discuss the types of services offered by the reporter’s firm. Is this an incentive gift in return for future work and therefore prohibited?

Discussion

COPE recognizes that court reporters are service providers and although they are held to a high ethical standard, they also must market and promote their services in order to continue to thrive in a competitive business environment. A prohibited incentive gift is one offered in direct exchange for future work. So, if a reporter were to make the following offer to an attorney “if you book a deposition with me, I’ll buy you a cup of coffee,” that would be considered an incentive gift and prohibited regardless of the value. However, to have a meeting to discuss the general use of your firm’s services and buy the attorney coffee during the meeting is considered a nominal gift and not in violation of the Code. If the meeting were a lunch meeting held in a restaurant or tickets to a sporting event, then the $100 limit would apply.

Charitable Gift Exemption
Scenario 4

A member offers to donate $50 dollars to a local charity in the client’s name for every deposition booked. Is this a violation of the prohibition on incentive gifts given in direct exchange for future work?

Discussion

Yes, COPE considers a gift to a charity on behalf of a client, when offered in exchange for each deposition booked, to be an incentive gift that is prohibited under Provision 8 of the Code. Were the scenario to be changed to state that the donation was made as a thank-you gift, then the answer would be that this is permitted, subject to the $100 limit just like any other thank-you gift.

Conclusion

COPE has attempted in this opinion to address some common scenarios faced by reporters. This is by no means intended to cover all of the possible examples of advertising, marketing, or thank- you gifts or incentives. COPE does hope that the rationale applied to these scenarios can be applied to other scenarios and therefore be a guide to members in making gift giving decisions.
This opinion should be read in conjunction with Advisory Opinion No. 45.