As a business owner or executive involved in a dispute, you may not yet know whether you have a viable legal claim – or who the right defendants are. Texas Rule of Civil Procedure 202 allows for pre-suit depositions, which can give you and your attorney a preview of the opposing party’s legal strategy, test the strength of your claims, and even lead to early settlement of the dispute, avoiding costly litigation.

Most importantly, in matters of suspected non-compete violations or stolen trade secrets, a pre-suit deposition can give you and your attorney the evidence you need to seek a temporary restraining order.

Whether an anticipated plaintiff or defendant in a potential lawsuit, let’s look at this litigation tool, and when and why your attorney may recommend it.

What Is Rule 202 in Texas?

Rule 202 refers to the pre-suit deposition rule in the Texas Rules of Civil Procedure. This rule allows a person or party involved in a dispute to request a deposition – sworn testimony recorded by a court reporter – to investigate a potential claim before filing a lawsuit or obtain testimony in anticipation of a lawsuit.

While most states allow some form of pre-suit discovery, Texas has one of the broadest provisions for pre-suit depositions in the nation, presenting Texas attorneys and their clients greater opportunity to investigate claims in a dispute, refine legal strategies and, in some cases, encourage alternatives to litigation.

Rule 202 is commonly used to:

• Identify potential defendants
• Collect evidence of non-compete violations or trade secret misappropriation
• Identify causes of action
• Refine legal theories
• Evaluate a case's potential value
• Discourage frivolous lawsuits
• Assess the scope of liability and damages
• Determine the financial solvency of potential defendants

See real examples of how Texas businesses have used Rule 202 to investigate trade secret theft, non-compete violations, defamation, and more: When Texas Businesses Use Pre-Suit Depositions – and Why It Matters

How Does Rule 202 Work?

To take advantage of Rule 202, the party wishing to take the deposition must petition the courts for an order allowing them to take the witness’ testimony. As interpreted by the Texas Supreme Court, Rule 202 “does not require a petition to plead a specific cause of action; instead, it requires only that the petition state the subject matter of the anticipated action, if any, and the petitioner’s interest therein.”

There are two distinct standards that must be met depending on the purpose of the pre-suit deposition:

1. If anticipating a lawsuit, a pre-suit deposition may be granted only if the trial court finds that doing so “may prevent a failure or delay of justice.” For example, if a witness is terminally ill, a pre-suit deposition will preserve that testimony should the witness not survive until the suit is filed.
2. If investigating a potential claim or suit, a pre-suit deposition will be ordered by the court only if the likely benefit of the testimony “outweighs the burden or expense imposed by the procedure.” That language generally results in the court imposing restrictions on the time spent deposing a witness – either in the pre-suit deposition or at a later date once the suit has been filed.

If the court grants the petition, the witness must be served with a notice of the scheduled deposition within a reasonable time, usually at least 20 days. The deposition is conducted under oath and recorded by a court reporter, just like a regular deposition. The deposition can take place in the office of the court reporter or in the office of one of the law firms involved in the case.

Plaintiffs: Using Rule 202 to Determine If You Have a Case

For plaintiffs, a pre-suit deposition can serve several purposes:

• First, it allows you and your attorney to gather evidence and information that may be necessary to support your claims. This is especially helpful if you suspect a former employee has misappropriated your trade secrets or is competing against you in violation of a non-compete agreement. A pre-suit deposition can give you the testimony and evidence you need to seek a temporary restraining order or temporary injunction to stop the damaging behavior.
• Second, Rule 202 can be used to identify potential defendants and other relevant parties. By taking depositions of individuals who may have knowledge or information about the alleged wrongdoing, you and your attorney can determine who else should be named as a defendant in the lawsuit.
• Finally, Rule 202 can be helpful in negotiating a settlement or avoiding litigation altogether. If you and your attorney can gather sufficient evidence during the pre-suit deposition process, you may be able to use that evidence to persuade the defendant to settle the case without going to court.

How Can Rule 202 Help Defendants?

For potential defendants in a lawsuit, pre-suit depositions can reveal the strength of the opposing party’s claims and allow you and your attorney to begin preparing for a potential lawsuit should the claim be filed. This early preparation can be invaluable and has the potential to significantly affect how a case progresses.

Other ways Rule 202 depositions can help a defendant:

• Provides notice: Rule 202 allows a defendant to get early notice of a potential claim and the evidence that the plaintiff has gathered. This can help the defendant to prepare their defense, identify potential weaknesses in the plaintiff's case, and determine whether to settle or fight the lawsuit.
• Saves time and money: If a plaintiff conducts a pre-suit deposition, the defendant may be able to use the information gathered during the deposition to resolve the case early on, potentially avoiding the time and expense of litigation.
• Prevents surprise: Pre-suit depositions can also help to prevent surprises during the trial. If the defendant has a better understanding of the plaintiff's claims and evidence, they can prepare a more effective defense and avoid being caught off-guard by unexpected evidence or arguments.
• Limits scope of discovery: If the plaintiff has already conducted pre-suit depositions, the defendant may be able to argue that certain topics or witnesses should not be allowed during the discovery phase of the trial, because the information has already been obtained.

Why Might Your Attorney Suggest Pre-Suit Depositions?

The most common reason your lawyer may recommend a pre-suit deposition is if you are currently involved in a legal dispute or believe you will be involved in one in the future. A pre-suit deposition can help your legal team assess the situation more clearly and give them a sense of the strength of either the claim you wish to bring, or the claim being made against you.

A pre-suit deposition may also help you and your legal team determine how best to proceed with your claim. By helping you identify potential defendants and witnesses, pre-suit depositions can help you see the situation more clearly, enabling you to build a stronger case or help you make important decisions during settlement negotiations.

The Downside to Rule 202 Depositions

Rule 202 depositions are not for routine use, harassment, or intimidation. In 2011, the Texas Supreme Court ruled that the “intrusion into otherwise private matters authorized by Rule 202 outside a lawsuit is not to be taken lightly.”

Another drawback is that the witness will often be deposed before knowing the issues. And, if the matter does end up in litigation, the same witness could be deposed twice, driving up the cost of resolving the dispute.

For these reasons, the courts are expected to carefully limit and supervise pre-suit discovery to prevent abuse of the rule.

Can You Refuse a Rule 202 Deposition Order in Texas?

A deposition is a court order. You can object to the time or place of the deposition, but refusing to appear may find you in contempt of court, punishable by fines and/or jail time.

You and your attorney can try to appeal a Rule 202 order, but precedent in Texas courts is mixed – some courts have concluded that Rule 202 orders are subject to appeal; others have concluded that a Rule 202 order is not appealable. Your attorney can advise you of your options.

Should You Take Advantage of Rule 202?

Pre-suit depositions can be incredibly useful for plaintiffs and defendants alike. By allowing parties to gather evidence and information early in the legal process, pre-suit depositions can help build stronger cases and better prepare for potential litigation. Alternatively, it can also help defendants and plaintiffs avoid litigation and pursue alternate ways to resolve the dispute.

If you are involved in a business dispute in Texas, ask a business litigation attorney if Rule 202 depositions should be part of your legal strategy. Contact Hendershot Cowart P.C. to schedule a consultation today.