unincorporated ageny's liability

[Ariela Pastel]

What would be the liability on an unicorporated agency if a reporter lost or made
some kind of huge mistake with the transcript? Even though reporters are independent contractors, is the agency ultimately liable and are they subject to being sued by the client? And if so, would this mean as an unincorporated agency, and if it was a general partnership, that the owners would be liable?
And another question is: does anyone that owns an agency have any examples of issues that have come up regarding liability?
If you are interested in starting a court reporting agency, what is the risk?
What are the necessary steps in order to protect your personal assets if you are starting out as a general partnership?

[Ariela Pastel]

Casey,

Wow, thanks for asking about that info and for writing back to me. That was so thoughtufl of you.
Shoot, only one space left for girls' night out?
I spoke with Cynthia last night and we were both going to reply.
She probably beet me to it and replied last night, but I will see if I can reply right now.
I'd love to make it.
Anyway, yeah, I was thinking of starting an agency, but I'm putting it off for a bit until I know exactly how to proceed, etc.
Thanks again for taking the time to write me what you found out...great advice...I appreciate it.
Hope to see you soon!
Ariela :)

[Patricia Harris Vernon]

Cassandra: You just posted one of the best replies for this type of discussion I have seen. Kudos to you. I do have a question, though, something I've not encountered. ICs need to provide their driver's license and invoice? As an IC, I've supplied a copy of my CR's license and the IRS form, but have never supplied my driver's license and most invoice for me. Can you enlighten me on that aspect? I might be missing important steps. Thanks.

[Patricia Harris Vernon]

WOW! Even with passing out the business cards...I'm assuming the firm's card, which some want me to. I very rarely have them and don't use mine when I'm an IC. I'll look for DRA's discussion. I thank you for such a succinct discussion. I'm wondering if this wouldn't be a good CE class with NCRA or state CRAs to education the firm owners and the ICs or freelancers. THANKS!

[Patricia Harris Vernon]

I have been on our state education committee (despite my education the firm owners up above), and with your permission, I'm going to copy what you've written to our committee and see what happens. ok?

[Patricia Harris Vernon]

I think you ought to write an article with the above...just like you did here...and submit to NCRA for publication in the mag.

[Valerie Eames]

Seems to me Casey has done a fabulous job answering Ariela's questions. DRA does offer CEs at their yearly convention in February and at their fall seminar in October, usually offering seminars on these sorts of topics. I know at the convention last year, we did have someone speak about incorporating vs. partnership vs. sole proprietor (filing a Schedule C).

I'm not sure what is being offered at the DRA convention in February 2009 in Newport Beach, but you can sure email any requests to me and I'll let the convention chair know. [e-mail]. Also, I believe we will have some vendors there you can speak to re this issue. Including medical insurance.

There's just so much to cover in this area, especially for new reporters. I suggest you at least have the basics down: business license, liability insurance (1 million is recommended), equipment insurance. I believe those are the "basic" necessities you really should carry. And I highly recommend disability insurance!! You'll have to shop around on that one. Marsh through NCRA does have liability and the equipment insurance. Then possibly do your research and go from there if you need to add "extras."

Some agencies do ask for a copy of your auto insurance and a business license. It is just agency-specific. I think some do request WAY TOO MUCH of an independent contractor. So forums like this one can be a great way to find out info, along with joining your state associations. Especially for depo reporters, DRA is the association to join. You get the monthly newsletters, along with going to conventions, seminars, and networking is the BEST way to get info.

But you can also check out DRA's website www.caldra.org. Thanks, Casey, for your much needed and welcome input!!!
val

[Lisa Migliore Black]

Could an argument be made that in an IC/firm relationship that the firm is actually an independent contractor that performs services for the reporter?

I mean, given the specialty of what we do as reporters and the fact that the reporter retains the majority of the split, do you think an argument with the IRS would hold water if the firm were considered the IC of the reporters, tasked with advertising, billing, binding, and scheduling services?

[Patricia Harris Vernon]

My question exactly!

[Lisa Migliore Black]

Don't get me wrong in that I'm very pro reporter. My thinking is not an attempt to shift more responsibility to the reporter, but if my reporters were employees and not ICs, I know their pay scales would reflect the approximately 7% costs of taxes that would be associated with that benefit, if you want to call being an employee a benefit.

I've looked at the IRS tests, and it's pretty much a 50/50 or a 60/40 on whether my specific situation would pass the IRS's muster. From my experience of seeing others battle with the IRS, convincing the IRS that you don't owe thousands more in taxes is a pretty uphill battle regardless of how strong your argument is.

If a firm passes along a notice and a reporter has to appear at a deposition at 10:00, but the firm does not regulate the hours worked spent producing that transcript, doesn't house the reporter in an office, doesn't dictate whether the reporter uses subcontractors (scopists, proofreaders) to finalize the transcript, is the firm in charge of dictating the reporter's schedule, or is the hiring attorney? Obviously, there is no employee relationship between the reporter and the attorney; that's forbidden by our Code of Ethics. Does requiring a two-week, one-week, or two-day turnaround, whatever the firm policy change that in the IRS's mind?