Litigation Funding Ethics in the US
The Third Annual Ethics Summit from Frankfurt Kurnit was held last month. The litigation funding panel covered a host of ethical and legal points of interest. These include coverage of the back-and-forth between the industry and the NYC Bar Association, and the ever-evolving rules of professional ethics. MONDAQ begins with an overview of the practice of Litigation Finance, including the non-recourse nature of funding and how it differs from traditional loans. This detailed the many advantages of litigation funding, including helping average citizens see their day in court without financial barriers. It also affirmed the risks—such as pushing the boundaries of attorney-client privilege, or funders attempting to make decisions about the cases they fund. The NYC Bar Association turned heads in 2018 when they asserted that Rule 5.4a disallows fee-sharing with non-lawyers—and therefore renders litigation finance prohibited. This stance has been debated, sometimes vehemently, by legal professionals. However, the opinion is not law, and litigation funding agreements have not changed because of it. The question of disclosure remains in flux. How much should a lawyer tell a potential funder? What should they be obligated to reveal? This is especially relevant in single-case funding. It only makes sense that funders want details to properly vet cases they fund, but the question of what they’re legally entitled to know remains up in the air. When states refine professional ethics and rules regarding litigation funding, they help ordinary citizens gain access to the justice system. While questions about disclosure and privilege remain, it cannot be denied that anyone who has been wronged deserves their day in court. Further, it should not be denied that litigation funding is the most effective way to secure the rights of citizens to pursue a case even when they lack the financial resources to do so.