Litigation Finance and Legal Ethics: Does A New World Require New Rules?
May 1, 2019 - 5:00pm to 7:00pm
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The challenge of financing legal services is one that clients and lawyers face together. Clients and lawyers both need access to capital to pay for the cost of lawyers’ time and other expenses. This is especially true in litigation funding, where financiers have begun to provide capital to both clients and lawyers in an emerging market that has been called "legal finance." As legal finance grows in significance, it has come under scrutiny from those who worry about its effects on society and whether it is compatible with lawyers’ professional responsibilities.
The Jacob Burns Center hosts a panel that will review legal finance from three perspectives.
It will explore the challenges faced by lawyers when they borrow funds from conventional lenders. To what extent may lawyers provide a security interest in anticipated but as-yet unearned fees? How can lawyers provide information to lenders without violating their duty of confidentiality to their clients? What kind of covenants can be included in loan documents concerning how the lawyer manages her work?
The panel will explore the permissibility of non-recourse advances to lawyers based on the recovery of contingent fees. A recent opinion from the Professional Ethics Committee of the New York City Bar Association, based on Rule 5.4(a), has raised questions about the permissibility of any non-recourse legal finance to lawyers. This panel will discuss the opinion and explore its implications.
This panel will also look at the world of "consumer" legal finance, where clients, often with their lawyers’ assistance, sell a contingent interest in smaller-value personal injury cases. These transactions have been criticized for being either consumer loans in disguise, or as otherwise unfair to clients who end up selling too much of their recovery for too little. This panel will review to what extent consumer legal finance is different from other forms of legal finance and whether reforms that specifically target the consumer side are needed.
• Peter R. Jarvis, Partner, Holland & Knight LLP
• Roy D. Simon, Distinguished Professor Emeritus of Legal Ethics, Maurice A. Deane School of Law at Hofstra University
• Victoria Sahani, Associate Professor of Law, Sandra Day O'Connor College of Law at Arizona State University
• Professor Anthony Sebok, Professor, Cardozo School of Law and Co-Director of the Jacob Burns Center for Ethics in the Practice of Law at Cardozo School of Law