The New York City Bar Association recently found that common forms of third-party litigation funding for law firms violate New York’s Rule 5.4(a), which like the analogous Model Rule, bars fee-splitting with non-lawyers.
In its Opinion 2018-5, the NYCBA’s Professional Ethics Committee advised that “a lawyer may not enter into a financing agreement
Early last year, the federal Northern District of California became the first court to require — by rule — that a party receiving outside litigation funding must disclose the arrangement. As we described, the rule is limited to class actions; it had been favored by the U.S. Chamber of Commerce, which views it as
Litigation funding is in the news again, with the U.S. Chamber of Commerce spearheading a request to amend the Federal Rules of Civil Procedure to require initial disclosure of all third-party agreements for compensation that are “contingent on, and sourced from, any proceeds of the civil action, by settlement, judgment or otherwise.”
The Chamber joined
On January 26, the U.S. District Court for the Northern District of California became the first to mandate disclosure of litigation funding that parties in class actions receive from outside sources, under a revision to the court’s standing order applicable to all cases. The rule provides that “in any proposed class, collective or representative action, the required disclosure includes any person or entity that is funding the prosecution of any claim or counterclaim.”