On August 3, 2020 the American Bar Association House of Delegates passed resolution 111A by a vote of 366-10, regarding the “Best Practices for Third-Party Litigation Funding”. The Best Practices addressed Consumer Legal Funding, Commercial Litigation Finance and Attorney Funding.
In reviewing the Best Practices for Consumer Legal Funding, ARC and its members made the decision to update the set of Best Practices our companies will follow. By following the guidance of the ABA, ARC and its members are setting a new high standard that others in the industry should follow.
The updated Best Practices can be found on the ARC Website
- Each member agrees the funding agreement will be in writing.
- Each member agrees the written funding agreement will make clear the non-recourse nature of the investment the funder is making in the claim.
- Each member agrees the funding agreement will state who is responsible for paying the funder, from what source (e., the recovery after trial or settlement), and when (g., after receipt by the attorney of judgment or settlement funds).
- Each member agrees the funding agreement will be structured so that the consumer, not the funder, retains the right to control the conduct and litigation of their claim.
- Each member agrees the funding agreement will state: the amount of funding to be provided to the consumer, the future amounts owed or method of calculating the amounts owed to the funder, and provide an independent dispute resolution process.
- Each member agrees the funding agreement will include a recommendation that a consumer obtains legal advice before entering into the funding agreement.
- Each member agrees that they will not intentionally provide the consumer funding in excess of the consumer’s needs at the time of such funding.
- Each member agrees that they will not intentionally over-fund a case in relation to their perceived value of the case at the time of such funding.
- Each member agrees that they will not advertise false or intentionally misleading information.
- Each member agrees that they will not offer or pay commissions or referral fees to any attorney or employee of a law firm for referring a consumer to the member.
- Each member will strive to achieve a rating of B or better with the Better Business Bureau.
On November 16th 2020, ARC will participate in a CLE Webinar with the ABA titled “Consumer Litigation Funding: The Basics, Current Regulatory, Ethical and Confidentiality Issues,” in which these Best Practices and other issues that affect the industry will be discussed.
When consumers and their attorneys are dealing with Consumer Legal Funding companies, they should look for the ARC Logo and ensure they follow the Best Practices of the organization.
Any questions on this or other issues regarding Consumer Legal Funding can be addressed to info@arclegalfunding.org
