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Upholding the Duty of Client Confidentiality During the Funding Process

By Jeff Manley |

The following article was contributed by Jeff Manley, Chief Operating Officer of Armadillo Litigation Funding. 

In the competitive landscape of litigation, the strategic use of litigation financing has become a vital tool for law firms to manage cash flow, mitigate risk, and level the playing field. However, the infusion of external capital into the legal process brings forth intricate ethical considerations, particularly concerning client confidentiality.

The Imperative of Confidentiality

At the heart of the attorney-client relationship lies the paramount duty of confidentiality, a cornerstone enshrined in the American Bar Association (ABA) Model Rules of Professional Conduct Rule 1.6. The Rule obligates attorneys to not reveal information related to the representation of a client without the client’s informed consent or unless the disclosure is otherwise permitted by the Rules. This duty persists beyond the attorney-client relationship and extends to all members of a law firm.

Ethical Complexities in Litigation Financing

Litigation financing requires attorneys to navigate a delicate balance: providing sufficient information to secure funding while safeguarding the sanctity of client confidences. The process typically involves disclosing case merits, potential outcomes, and strategies—details that, if not handled correctly, could jeopardize client confidentiality.

Crafting the Safeguards

Non-Disclosure Agreements (NDAs): Prior to any discussion, law firms must insist on stringent NDAs with financing entities. These NDAs must be tailored to explicitly protect any information that may relate to a client’s case.

De-identification of Data: Information shared during the funding process should be stripped of any identifiers that can link it to a specific client. This step ensures that financiers can evaluate the investment on its merits without risking a breach of confidentiality.

Use of Aggregated Data: Where possible, firms should rely on aggregated statistics and data analytics that provide an overview of the firm’s track record and the types of cases they handle, rather than details of individual cases.

Informed Consent: In scenarios where the disclosure of identifiable information is unavoidable, the law firm must obtain explicit, informed consent from the client. This consent should be thorough, documenting the specific information to be disclosed, the purpose of the disclosure, and the parties to whom it will be disclosed.

The ethical obligations surrounding confidentiality are not mere guidelines but are anchored in legal and regulatory frameworks that govern the practice of law. Violations can lead to disciplinary actions by state bar associations, potential disqualification from cases, and even civil liability.

Continuous Ethical Vigilance 

The journey towards ethical compliance in litigation financing is not one that a law firm undertakes alone. It is a collaborative endeavor that greatly benefits from the engagement of a respected and knowledgeable funding partner. Such a partner brings to the table a deep understanding of the legal landscape and the specific nuances of confidentiality laws that govern attorney conduct.

Selecting the Right Partner: A reputable litigation finance partner will have stringent ethical standards in place and will be well-versed in the ABA Model Rules, state bar directives, and relevant case law. This expertise is invaluable in helping to structure financing agreements that are not only beneficial but also fully compliant with legal ethics.

Joint Compliance Efforts: A trusted funding partner contributes to the law firm’s efforts by engaging in joint compliance checks and due diligence. They will proactively work with the firm to ensure that all shared information adheres to the principles of confidentiality and that any potential ethical pitfalls are identified and mitigated early on.

The landscape of legal ethics is not static; it evolves with new rulings and regulations. A knowledgeable funding partner remains abreast of these changes and works alongside the law firm to adapt practices and agreements accordingly. This dynamic approach ensures that the firm’s operations remain compliant over time.

In the intricate process of litigation finance, a law firm’s dedication to maintaining confidentiality must be matched by the acumen of its financial allies. The right funding partner does not merely provide capital; they contribute to the ethical fortitude of the funding process. Through continuous vigilance and a partnership grounded in mutual respect for the law, firms can navigate the complexities of litigation financing while upholding the sacred duty of client confidentiality.

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Commercial People Moves

LPF Group Appoints Former High Court Judge as Director

By Harry Moran |

In an announcement released earlier this week by LPF Group, the New Zealand litigation funder revealed that it had strengthened its board with the appointment of Judge Robert Dobson KC as a director. Mr Dobson brings a wealth of experience as both a commercial lawyer and judge, having served on the High Court from 2007 to 2020. Mr Dobson briefling returned to the bench as an acting judge on the Court of Appeal in 2022, before returning to his arbitration and mediation practice at Stout Street Chambers.

Phil Newland, founder and director of LPF, said “LPF is delighted to have Mr Dobson, a proven jurist with substantial legal and judicial experience join the board at such an important time for the development of class action law in New Zealand.”

Commenting on his new role, Mr Dobson stated: “Having observed LPF’s role from a different perspective for many years I now look forward to playing a part in continuing the development of litigation funding and assisting access to justice. I am very much looking forward to joining LPF in helping meritorious cases attract funding in the pursuit of justice.”

In addition to the appointment of Mr Dobson, LPF also stated that the company’s current Chairman, Bill Wilson KC, will be moving to the position of Emeritus Chair to provide continuing support to the funder’s board. Newland praised Wilson’s work during his time at LPF by saying “With Bill’s strong support LPF has assisted many thousands of New Zealanders to achieve redress, including in leading cases such as Mainzeal, Kiwifruit and in the recent CBL and Intueri shareholder class actions.”

Commercial Regulatory Issues

CAT Chairman: “Funding is Essential” for Collective Proceedings Success

By Harry Moran |

Following the publication of the Civil Justice Council’s interim report on litigation funding, industry leaders and experts have opined on the future direction of UK’s funding market. At a recent industry conference, attendees were treated to the views of the head of one of the country’s most important judicial bodies when it comes to litigation funding.

Reporting by CDR covers remarks delivered by Andrew Lenon KC, chairman of the Competition Appeal Tribunal (CAT) at the Global Class Actions Symposium. The keynote speech on the second day of the symposium saw Lenon discuss the current state of the CAT and the involvement of third-party funding, which he described as “essential to the success of the collective proceedings regime.”

Lenon noted that despite the period of uncertainty in the initial aftermath of the PACCAR decision, he suggested that “it seems likely that the UK market for litigation funding and collective proceedings will continue to grow.” Furthermore, Lenon argued that in this growth environment, the result would be the emergence of a “fully functioning competitive market for litigation funding.”

The CAT’s chairman emphasised the tribunal’s role “to clarify the legal principles relating to funding arrangements”, with a focus on ensuring that “collective proceedings do not become a cash cow to funders and lawyers, with minimal returns to class members.” However, in a welcome nod to funders and lawyers alike, Lenon assured that the CAT “will be slow to interfere with funding arrangements freely negotiated between funders and class representatives.”

Whilst he acknowledged that the CAT must keep a close eye to ensure that funder’s fees and legal costs do not spiral out of control, Lenon agreed that it was “entirely legitimate for funders to seek a return on their investment.” In summarising the CAT’s position on interfering with litigation funding agreements, Lenon said that “the tribunal should therefore be slow to second guess.”

Case Developments Commercial

Which? Files £3 Billion Cloud Claim Against Apple, Funded by LCM

By Harry Moran |

The growth of multinational technology corporations has provided years of product innovation and a mass availability of affordable consumer electronics. However, the resulting monopolies that have risen to dominate these markets have also created space for the potential for anti-competitive behaviour that harms consumers. In this environment, it is unsurprising we are seeing more and more claims being brought against these tech giants, with the legal proceedings supported by third-party litigation funders.

An article in TechCrunch covers the announcement of a new collective action being brought against Apple by the UK consumer rights group Which?, representing up to 40 million consumers over allegations that Apple breached competition law by overcharging users of the iCloud service. The opt-out proceedings, valued at approximately £3 billion, claims that Apple abused its monopoly position to favour iCloud over competing cloud storage providers and locking in customers to the iCloud services, thereby preventing them from switching to a competitor and enabling Apple to charge increasingly higher fees.

The application for certification was filed with the Competition Appeal Tribunal (CAT) on 8 November 2024, with the claim seeking to represent any UK consumer who used an iOS device or iCloud services from 1 October 2025 onwards. This nine year time period is particularly relevant as it follows the introduction of the Consumer Rights Act from that date. The claims is being funded by Litigation Capital Management (LCM), with litigation risk insurance having been secured to cover Apple’s legal costs if the claim is not successful

More information about the collective proceedings can be found on the Cloud Claim website.

In response to this new legal action being brought, Apple spokesperson Tom Parker provided the following statement: “Apple believes in providing our customers with choices. Our users are not required to use iCloud, and many rely on a wide range of third-party alternatives for data storage. In addition, we work hard to make data transfer as easy as possible — whether its to iCloud or another service. We reject any suggestion that our iCloud practices are anticompetitive and will vigorously defend against any legal claim otherwise.”