The Truth About Corporate Depositions: Proceed With Care

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By: Jennifer Thomas

Lerch, Early & Brewer's Legal Update

Depositions are one of the most important discovery tools used in commercial litigation. Corporations, associations, and partnerships – not just individuals – can be named as deponents. Once named as a deponent, the entity is then faced with the task of determining who will speak on its behalf. The testimony of these designated individuals is binding on the organization, and thus significant time and care should be taken in the selection and preparation of these representatives.

Both federal and state court rules allow for the depositions of corporate entities or other organizations to be taken. The party seeking to take the deposition of an organization will issue a notice that identifies the date, time, and location of the deposition. In addition, however, the notice will identify the subject matters that the deposition will cover. The organization must then identify the person(s) who will testify on its behalf in connection with these subject matters. Since this can be a time-consuming process, a notice of corporate deposition should be immediately forwarded to counsel so that he or she can begin working with the corporation to ensure it complies with its legal obligations.

As with any deposition, a corporate deposition consists of answering questions under oath in the presence of a court reporter who is recording the proceedings. Although the procedure appears to be less formal than a court proceeding before a judge, the testimony is given under oath, and thus is just as significant. In Maryland, a deposition can take up to a full day, and possibly longer if the court permits. A properly issued subpoena to attend a deposition is considered a court order, and thus one can be held in contempt of court for failure to comply with the subpoena.

A notice of corporate deposition requires the corporation to designate and prepare one or more individuals to testify on the organization’s behalf and communicate its knowledge. Although in many instances the person(s) selected is a corporate officer or director, there is no restriction as to who may be designated. There is also no requirement that the person have firsthand knowledge or involvement in the subject matters the deposition will cover. The organization, however, has a duty to prepare the witness to testify concerning any matters known or reasonably available to the corporation. If the designated witness is not adequately prepared to testify on behalf of the organization, the court may order sanctions.

The organization is not only legally required to prepare its designated deponent, the preparedness of the deponent is critical because any testimony given during the deposition is binding against the organization. Any admissions made by the deponent in connection with the designated subject matter are deemed an admission by the organization, and could be fatal to the case. In addition, inconsistent testimony of designated deponents is always a concern with multiple designations. Thus it is crucial that the designated deponent work closely with counsel in reviewing the organization’s documents and speaking with other employees to ensure that he or she is prepared to testify in regard to the designated areas.

In summary, the deposition of an organization in commercial litigation is critical. It provides the organization with the opportunity to present a human face and to convey its version of the events. It also permits the organization to choose who is best suited to speak on its behalf. In making this designation, however, the organization must be diligent, as the testimony of those designated will bind the organization.

For more information about corporate depositions, contact one of our Litigation attorneys.

This content is for your information only and is not intended to constitute legal advice. Please consult your attorney before acting on any information contained here.