As explained in August, many court reporting firms attempt to beat the competition through what can be described as cost shifting. The CR firms charge really low on the original transcripts that their clients buy and charge astronomical prices on copy sales in order to make up for the loss. This has a net effect of making it harder for small businesses to compete. As far as I understand, this occurs in many markets in the United States and is not rare, but the news media and government pay little attention to our $3 billion industry, allowing rampant abuse and fraud against our consumers, attorneys across America. Perhaps I should be grateful. The complete failure of the media to provide anything but thinly-veiled marketing for digital court reporting has opened up a special niche for me.

When a source passed me this letter from the late Richard R. Johnson, Esq., I was delighted. It was yet another tangible piece of evidence that the abuse we have, as a field, long suspected was occurring, was actually occurring. After all, we cannot solve problems in our industry without discussing them. For reference, the proceeding occurred in May 2017. The letter was written in June 2019.

Mr. Johnson uses that word “unreasonable.” For many court reporters, that term unreasonable rings a bell, US Legal Support was accused of the same. And we do not have to take his word for it, we have also been provided with a copy of the bill Naegeli sent.

What’s more, my source tells me that the deposition was taken by a digital court reporter named April J. Austin. I hope Austin finds stenography for all the reasons I’ve covered in past articles. I am further informed that Washington is a mandatory CCR state, RCW 18.145.010, which means that the use of digital court reporters is likely illegal. I know what my audience is thinking. “Isn’t that what got StoryCloud in trouble?” Yep. Here are some documents related to that fiasco. For more on the practice of court reporting in Washington State, see RCW 18.145.020.

I asked Naegeli to comment. Naegeli’s Richard Teraci tried to tell me that the reason the copy was so high was because it was an expedite. He also asked me to please remove it from my blog.

A source close to the issue stated that the matter was ultimately concluded by Mr. Johnson consulting a court reporter in Washington State on what a reasonable fee would be for the copy. Mr. Johnson allegedly forwarded that amount to Naegeli and that was the end of the matter. The source also stated that normal copy fees at that time were under $3.25 per page in Washington and that currently a normal copy fee is under $3.50, though some agencies do charge “considerably” more, up to $3.80 per page.

Even without Naegeli’s cooperation, we do have some idea of that Washington market. We also know what Naegeli is looking to pay transcribers on digital matters, so we can work out about what it might have cost Naegeli to produce the transcript. Just for a recap, Naegeli wants to pay transcribers $1.75 per page. That’s about $105 for a 60-page transcript. Succinctly, on a copy sale, it appears that Naegeli intended to charge about 7x what it would have cost to produce the original. For people that don’t understand the way this business works, in conventional court reporting, the original has always been a higher cost than the copy, and the split between court reporters and firms in markets where court reporters aren’t 30 years behind inflation is a lot closer to 50/50 than giving the transcriber a pathetic 15%. This also assumes that the transcriber was given a percentage of the copy money, which is an assumption so generous Robin Hood would probably cringe. Transcribers typically aren’t given anything and may even live offshore.

If those market comparisons are unclear, let’s try some more comparisons. Let’s compare Washington State to New York. In New York, the freelance stenographic reporters routinely make somewhere in the ballpark of 25 cents on a copy. The officials make somewhere in the ballpark of a dollar. As of writing, the cost of living in New York City is about 33% higher than Seattle, so you would expect the New York prices to be somewhere in the ballpark of 33% higher. Again, New York court reporting rates are 30 years behind inflation, meaning New York’s prices should be about double what they are. That would be in the ballpark of $0.50 a copy for freelancers and $2.00 a copy for officials. Assuming a traditional 50/50 split, a reasonable copy could be said to be in the realm of $4.00 per page. The bill from Naegeli is about 3x what is reasonable on a copy and about 7x what it would’ve cost to produce. Even if we buy what Mr. Teraci says about it being an expedite, expedites are usually in the realm of 50% higher price, not triple.

There is also an elephant in the room. The copy sale does not stand alone, it stands alongside whatever Naegeli made on the original. Handing out generous assumptions to prove a point, assume the original was one third of the copy sale. That would be $15.30 per page. If that’s reasonable, then every stenographer in New York City should move to Washington, because our reporters routinely get a comparable amount of work done for $4.50 a page or less. Assuming an expedite, under $6.00 a page. I cannot make it clearer that court reporters can compete with these “large” agencies and probably make more money doing so. The simple truth is every reporter produces most of the work and has none of the overhead. That’s like Walmart treating its workers poorly if every single employee had the ability to compete with Walmart. Agencies have a value, as I will cover in a future post, but their value to us is diminished when they’re not selling steno.

All of these comparisons, of course, are assuming parity with stenographic court reporting. Digital court reporting is not as efficient as stenography, and therefore in any real-world evaluation, that fact must be taken into account. Stenographer rates are being charged for what is an inherently inferior service. Put it this way, digital reporting is so bad that it has to defraud people interested in court reporting to get them to go digital.

May this set the stage for us to discuss price structure as a field. While there are certainly antitrust concerns when court reporters discuss pricing due to our heavy use of independent contractors, it seems reasonable to ask ourselves if this is a fair way for consumers to be treated or business to be conducted. It also seems fair for our trade associations to begin collecting and dispersing historic, regional rate data so that our students can never be taken advantage of again in the way that my generation was.

For what it’s worth, Kentucky is leading the charge there.

Legality aside, imagine if you were the Johnson firm. Is it fair to be locked into a copy sale from a service that can just charge whatever it wants, see if you pay it, and then cut the bill down to a third of what it was if you complain? Reminds me a lot of the way medical billing is today. Think of how happy receiving surprise medical bills makes you. Now, just think, that’s what’s happening every time a law office gets a bill for $11.50 on something where the actual value is about $4.00.

Reporters need to start competing. Digital isn’t cheaper than you and the rapacious behavior of companies like Naegeli is destroying your profession. Our collective job security relies on broadcasting that fact.

Addendum:

I have been informed by its owner that Cover Crow will soon release tools to track and release rate data. This may be an opportunity for associations to get a head start on collection of data from multiple sources.