By Ralph J. Sutton
Last October, the New York City Bar established a working group to study the litigation funding industry and deliver a report by the end of this year. May 30 was an important milestone for the working group, as it was the deadline for the legal community to provide the working group with comments about the benefits of litigation funding.
Discussions of litigation finance typically focus on whether funding is consistent with various legal and ethical rules, such as duties to maintain client confidences and prohibitions against sharing fees with non-lawyers. We expect many submissions to address these issues, and the comments submitted by our litigation finance company, Validity Finance, focus in part on funding’s consistency with these background rules.
But it is not simply that litigation finance does not violate the ethics rules. As we explain in our comments to the working group, properly understood the ethics rules may affirmatively require lawyers to familiarize themselves with litigation finance if they are to competently advise their clients.
The New York Rules of Professional Conduct require lawyers to provide “competent representation to a client,” and they prohibit lawyers from failing to “seek the objectives of the client through reasonably available means permitted by law and these Rules.” (Rule 1.1). Over the past decade, litigation finance has become an essential and increasingly available means by which claimholders may achieve their legal objectives.
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