Litigation finance has overcome initial skepticism regarding litigation funding due to potential ethics issues, such as fee-splitting rules, maintenance, and champerty. Furthermore, modern third-party funding practices do not conflict with such duties as attorney/client privilege, attorney independence, and the work product doctrine.
Ethics
A New York Appellate Court Weighs in on Litigation Funding Disclosure: Relevance is Paramount
Marla Decker
As litigation funding becomes more normalized, the disclosure of litigation funding arrangements is a much talked-about and evolving issue. The question is simple: under what circumstances can a litigant receiving litigation financing be compelled to disclose details about the funding arrangement. Calls to require disclosure in federal courts through FRCP rule changes, while not adopted, has prompted some individual courts (notably the District of New Jersey) to require some disclosure. Arbitral institutions have also examined the question and were among the first to set forth rules, requiring modest disclosures.
Read MoreThe Argument for Why Counsel Have an Ethical Duty to Inform Clients About Litigation Finance
Marla Decker
Recently, I met a General Counsel of a mid-cap company who had only just learned about litigation finance. She was both intrigued about the possibilities that litigation funding could unlock for her company (as a company with an active litigation docket) and dismayed that she hadn’t heard of this option sooner: “Why haven’t my outside counsel told me about this?”
Our conversation reinforced that even though litigation finance is increasingly well-known among litigators, there remains substantial opportunity for education, especially among in-house counsel. But the GC’s question also made me consider whether the pendulum has now swung from the industry’s early days when counsel questioned whether they were ethically permitted to inform their clients about litigation funding to a point where counsel now have an affirmative duty to inform their clients about litigation funding as an option to finance litigation costs?
Read MoreLevelling the Playing Field: The Rise of Litigation Funding in Canada
Marla Decker
Lake Whillans has been following closely the developments in Canada related to litigation funding and recently consummated its first public and court-approved litigation funding agreement in Canada. In Lilleyman v Bumble Bee Foods LLC, a class proceeding alleging violations of the Competition Act among canned tuna producers, Lake Whillans provided expenses and a cost indemnity to the plaintiff in exchange for a share of any future proceeds. We first wrote about early decisions related to litigation finance in Canada in 2015, and since then litigation funding has steadily gained acceptance amongst parties, practitioners and the courts. While litigation funding is becoming a world-wide phenomenon, each jurisdiction approaches the practice slightly differently. We asked Gavin Finlayson (Partner, Miller Thomson LLP) and Monica Faheim (Associate, Miller Thomson LLP), to provide us with an overview and insight on the Canadian viewpoint and legal framework of litigation funding.
Read More“State of the Rules” on Third-Party Funding in International Arbitration
Marla Decker
The role of third-party funding in international arbitrations is on the rise, in both common and civil law jurisdictions. Lake Whillans is meeting that demand with expanded capabilities and investments in the space. To help our audience understand the developing corpus of rules and guidance set forth by international arbitral institutions addressing such matters as disclosure obligations, privileges, and allocation of costs, we asked Ari MacKinnon, Aaron Gavin, and Leila Mgaloblishvili of Cleary Gottlieb to provide an overview.
Read MoreLitigation Funding? Hardly Relevant (To Claims and Defenses That Is).
Marla Decker
A magistrate judge in New Jersey overseeing an MDL related to an allegedly contaminated pharmaceutical drug recently denied the defendants’ request for discovery into the plaintiffs’ potential litigation funding arrangements. While the denial of litigation funding discovery is not unique, the decision–which holds that the sought-after information was not relevant to the claims or defenses–is significant in that it leaves no doubt that, without more, requests for fishing expeditions into litigation funding arrangements fail when examined. And that the trend in the case law is in agreement.
Read MoreLaw Firm Portfolio Financing: A Primer On The Current State Of Ethical Considerations
Garrett Ordower
Can law firms ethically take litigation funding secured by their anticipated fees? Litigation funding generally comes in two varieties — funding to a claimholder or funding to a law firm. Last year, an advisory ethics opinion by the New York City Bar Association called into question the propriety of providing funding to a law firm…
Read MoreAcceleration Bay Work Product Decision
Garrett Ordower
The latest work product decision in the litigation finance sphere — Acceleration Bay v. Activision Blizzard — bucks the near universal trend of courts finding that the work product doctrine shields disclosure of communications exchanged with an actual or prospective litigation funder. Probably because it used the wrong legal standard.
Read MoreUpdate: Rules Governing Disclosure of Litigation Finance
Garrett Ordower
The U.S. Court’s Advisory Committee on Civil Rules signaled in its recently released report that litigation finance continues “growing and evolving” and that considering potential rules mandating disclosure of funding arrangements must begin “if at all, by undertaking a careful quest for information that may be hard to come by.” That process will not proceed…
Read MoreLitigation Finance: Work Product & Discovery in the Wake of Gharabe v. Chevron
Garrett Ordower
The closely watched case of Gbarabe v. Chevron – a class action against the oil giant based on an oil rig explosion off the coast of Nigeria – has been portrayed as a cautionary tale for the world of litigation finance. The defense attorneys’ dogged pursuit of the details of plaintiff’s outside funding, the story goes, succeeded, and aided in the attack on the adequacy of plaintiff’s counsel. The defense did successfully defeat class certification, but litigation funding ultimately played little or no role in the case’s demise.
Read MoreDraft Report of the International Council for Commercial Arbitration on Third-Party Funding: What You Need Know
Marla Decker
The Draft Report of the International Council for Commercial Arbitration and the Queen Mary University of London Task Force on Third-Party Funding in International Arbitration: What You Need to Know
The international arbitration community has been a leader in the adoption and evolution of third-party funding. Continuing that trend, The International Council for Commercial Arbitration (“ICCA”) partnered with Queen Mary University of London (“QMUL”) in 2013 to establish a task force comprised of over 50 leading international arbitration experts (the “Task Force”) to “identify and study the issues that arise in relation to third-party funding in international arbitration, and to determine what outputs, if any, would be appropriate to address them.”
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