Expert Retainers and NYC’s “Freelance Isn’t Free Act”
NYC litigators need to understand the significant impact that the City’s “Freelance Isn’t Free Act” (“FIFA”) has on hiring expert witnesses.
FIFA Makes a Hard Process Even Harder
Hiring experts has always been a fraught process. Impending court deadlines limit the time busy counsel has to locate experts and negotiate favorable retainers. Clients may be desperate to lock in highly-credentialed experts but have little understanding of the costs involved. Some experts then fail to deliver: their reports are bad, their testimony weak, and their bill excessive. Fee disputes are common, and some clients blame counsel for committing them to expensive engagements that they didn’t fully understand. In contingency matters, plaintiffs counsel itself may be on the hook for significant expert fees, which may not go down well with fellow partners.
FIFA’s recent enactment compounds these problems. FIFA was motivated by the notion that freelancers have limited bargaining power, earn modest amounts, and do not have adequate remedies at law. FIFA provides freelancers significant new rights to compel timely payment. FIFA’s powerful remedies, however, apply equally to sought-after experts earning $800 an hour as they do to graphic designers earning $20 an hour. FIFA therefore provides additional leverage to highly-compensated experts who may already enjoy significant bargaining power due to the specialized nature of their expertise together with the realities of high-stakes trial practice.
FIFA defines a “freelance worker” as “any natural person or any organization composed of no more than one natural person.” Given the independent nature of their practice, this definition covers many expert witnesses.
FIFA’s remedies are punitive and poorly defined. The Act provides freelancers with a claim for the “value of the underlying contract” if the retainer agreement does not contain the provisions required by the law. FIFA further provides a claim for double damages plus attorneys fees in any case in which a freelancer isn’t timely paid. Finally, FIFA provides freelancers retaliation claims “equal to the value of the underlying contract” in the event a party takes “any action” to deter a freelancer from enforcing its right to immediate payment. Counsel would strike such onerous terms from any negotiated agreement, but there doesn’t appear to be any way to waive FIFA’s statutory rights.
FIFA Provides Experts Tremendous New Leverage
FIFA’s remedies dramatically increase experts’ leverage. In any dispute over fees, experts now have multiple causes of action to recover up to four times the value of the “underlying contract” (however that is defined), together with attorneys fees. To date, there is little case law interpreting FIFA’s terms.
Consequently, FIFA makes it more important than ever for counsel carefully to negotiate expert retainer agreements and fully explain to clients the potential costs involved. Prior to FIFA, unhappy clients could delay payment to obtain leverage to negotiate a contested fee. After FIFA, such a course may expose clients to significant additional statutory liability. While counsel should make sure clients understand freelancers’ FIFA rights in any context, it is particularly important for counsel carefully to explain the scope of these non-negotiable statutory rights when counsel takes the lead in retaining an expert witness on behalf of a client in a litigation.