This is part two of a three-part series. Part one provided you with a greater understanding of the subpoena process and best practices. The focus of this article is to discuss the particular cost risks that a company faces in responding to a subpoena and how those risks can influence your company’s response.

The risks that a company faces upon being served with a subpoena fall into five categories:

1.  Response costs

Response costs represent the company’s time, money and other resources used for complying with the subpoena. They include three items:

• Research and appearance costs,
• Attorneys’ fees
• Reproduction costs

Although most jurisdictions require payment of witness fees, those fees are relatively low (often between $5 and $40 per day). Most jurisdictions do not allow a witness to be compensated for time spent searching his or her records and preparing to testify. Similarly, the cost of seeking an attorney’s advice is an unreimbursed cost that, absent sanctionable conduct, is borne by the witness. Not all courts allow witnesses to be reimbursed for the costs of producing their records and, instead, have ordered reimbursement only when the production costs are great or the document demand is unreasonably broad. As such, a company subpoenaed to testify or produce documents will incur some unreimbursed cost in complying with a subpoena.

Response costs will dictate in large respect how one responds to a subpoena. Obviously, if there is relatively little cost to be incurred in responding, a company may not object to the subpoena or seek to have it modified or quashed. However, if the response costs are great, then it is likely that the company will make some type of objection or motion. Consequently, response costs are an important risk that must be assessed and quantified.

2.  Relationship costs

Responding to a subpoena gives rise to a number of other risks that may not be as quantifiable as response costs. One of those risks might be the damage that a company may suffer to its relationship with either of the parties to the lawsuit or the person or entity that is the subject of the subpoena.

For example, in a lawsuit between a salesman and her employer over unpaid sales commissions, a subpoena may be directed to your company in order to learn information about the sales that have taken place. Your company has a relationship with both litigants and does not want either relationship destroyed. However, its decision to comply or not comply may affect both relationships, thereby resulting in a cost to your company.

Not many courts have addressed the issue of the relationship cost on a non-party witness. Those that have confronted the issue have found that a relationship cost, by itself, is an insufficient basis not to comply with a subpoena. However, there have been times when the relationship cost, together with other factors, has justified either a modification or quashing of a subpoena. Thus, although it may not be easily quantified, the relationship cost is a risk that a company must consider and evaluate.