California Bar Opinion May Supersede ABA Recommendations
A recently released California State Bar opinion on ethics is likely to hold sway in the legal world despite differing markedly from the NYC Bar and ABA recommendations. The opinion covered legal finance and the ethics in utilizing it, and involved multiple rounds of public commentary—including funders like Burford Capital. Bloomberg Law details that California, as the second-largest community of legal professionals in the US, felt that the existing guidelines were lacking. But like the ABA guidelines, the California opinion is merely a suggestion and does not indicate new law. First, the opinion affirms that a lawyer’s duty is to the client, first and foremost. Funders absolutely do not control litigation, strategy, settlements, or any other decision-making. Lawyers are required to provide competent advice and are encouraged to educate themselves on litigation funding. Burford Capital has stated that nearly 80% of in-house counsel believe the firms they work with should provide basic information about legal funding. As to the champerty question, the California opinion affirms that champerty law does not apply and that Litigation Finance is a legal and ethical practice. Champerty, or funding a suit in return for financial gain from the outcome, is a medieval term that has been largely dismissed. Litigation Finance continues to grow and evolve as its popularity increases. The California opinion is one more way to add transparency and consistency to the industry.