Background
Veritext LLC, a court-reporting service provider, sued Newman Law Group LLC for unpaid invoices totaling $50,921.26 for court-reporting services (primarily depositions) provided between March 2020 and January 2022. Newman, a Dayton-based law firm, denied liability and argued under agency law that its clients—not Newman—were responsible for payment. Newman raised the statute of frauds as an additional defense and filed counterclaims and third-party complaints against its former clients.
The trial court granted Veritext partial summary judgment on liability and held a bench trial on damages, ultimately awarding Veritext $50,748.73. Newman appealed, raising four assignments of error challenging the liability determination and damages award.
The Court’s Holding
The Second District Court of Appeals affirmed, holding that Newman Law Group was liable for the unpaid court-reporting services. The court applied the longstanding rule from Gaines Reporting Service v. Mack (Ohio 1982), which provides that absent an express agreement or express notice to the contrary, an attorney is liable for stenographic services ordered on behalf of a client. The court found no evidence that Newman expressly notified or agreed with Veritext that only Newman’s clients would be financially responsible. An “implied contract” under which Newman merely forwarded invoices to clients was insufficient to constitute express notice or agreement.
The court rejected Newman’s agency law defense, explaining that while attorneys can act as agents under certain circumstances, agency law principles do not apply without express notice to the service provider that it is dealing with a disclosed principal. The court also rejected the statute of frauds defense because (1) under Gaines, the debt falls directly on Newman as the party ordering the services, not as a guarantor of clients’ debts; and (2) Veritext’s full performance of the services removes the matter from the statute of frauds regardless.
Regarding damages, the court affirmed admission of Veritext’s invoices under the business records exception to hearsay, finding that Veritext’s finance specialist possessed sufficient working knowledge of the company’s billing procedures to establish the invoices’ reliability. The court found no abuse of discretion in the damages award.
Key Takeaways
- Attorneys ordering court-reporting or expert services are personally liable for payment unless they provide express, advance notice (prior to service) that the client will pay, or enter an express written agreement to that effect.
- An implied arrangement where an attorney simply forwards invoices to clients for payment does not constitute express notice or agreement sufficient to shift liability to the client under Ohio law.
- Agency law principles do not shield an attorney from liability simply because the attorney was acting on behalf of clients; express notice to the service provider that it is dealing with a disclosed principal is required.
- The statute of frauds does not apply to bar an attorney’s liability for services when the attorney directly incurred the debt, rather than guaranteeing a client’s debt.
- Service providers must establish express written procedures with clients (including client consent) if they wish to be paid directly by the client rather than by the hiring attorney.
Why It Matters
This decision reinforces a critical principle for court-reporting companies, expert witnesses, and other litigation-support service providers: absent clear, written, advance agreement or explicit notice, the hiring attorney—not the client—bears financial responsibility for unpaid services. The decision protects service providers from being caught between non-paying attorneys and clients who assumed the attorney would handle the bill, but it also imposes practical obligations: service providers cannot rely on assumptions or past practices. They must affirmatively obtain express notice or written agreements if they want clients—rather than attorneys—to be financially responsible.
For attorneys, the decision clarifies that internal fee agreements with clients regarding cost allocation do not automatically bind third-party service providers. This means law firms cannot simply assume that because a client agreed to pay all litigation expenses, service providers will automatically look to the client for payment rather than the firm. Attorneys wishing to shift payment responsibility must communicate that intent directly to service providers before work begins.