In this week’s version of Throwback Thursday, I’m re-running this post on Alternative Litigation Financing. From a rules perspective, I don’t have any particular interest in the topic. I’m reprinting it for 2 reasons.
First, the not-so-important reason. Oddly, the post is this blog’s most-visited. Here’s a picture of my 2017 stats. The most visited page is the home page – something you get to just by going to the blog, and a page that changes with each new post. The post on Alternative Litigation Financing is the most-visited page that you actually have to seek out.
Not surprisingly, the post wasn’t exactly an instant classic. I posted it in December 2016. By and large, it went unread before it’s popularity inexplicably spiked in April. It has remained popular ever since. Here’s a picture of the post’s monthly visits:
The post isn’t tagged. Yet, “ALF” must be a relatively common search term that drives visitors to this site. I have a feeling they aren’t looking for legal ethics or a post about the tv show.
By the way, don’t worry – I can’t tell which posts you read. I pay for the free version of WordPress, which means I can only determine whether some unidentified person or bot (dare we say ALF?) visited a post.
Here’s the other reason that the original post interests me. An impetus behind the original post was to convey that we do not (and should not) have to evaluate every new thing for compliance with the rules. What do I mean by that? Let me tell you.
It happens most often with technology. As a profession, we went through the exercise EVERY SINGLE TIME technology provided a new means of transmitting and storing client information. Is it ok to communicate by fax machine? What about a car phone? Are cell phones ethical? Email must be a violation, right? Can I text clients? Is it okay to use cloud storage?
Fortunately, over the past few years, bar associations and regulators have recognized the folly in such an approach. A better approach is to establish the principle, then apply the principle to whatever’s next. For example: lawyers have a duty to take reasonable precautions to prevent unauthorized access to, or inadvertent disclosure of, information related to the representation of a client. Boom! There it is. Now, when whatever is next arrives, you’ll know.
Same thing with alternative litigation financing. Yes, it’s new and different. However, for almost as long as lawyers have existed, they’ve taken cases in which payment is made by someone other than the client. We have a principle that applies in that situation: the payor cannot interfere with the lawyer’s independent judgment and is not entitled to information about the matter unless the client consents. That principle applies when a parent is paying for kid’s DUI, as well as it applies when plaintiff’s attorney is using crowd-funding or another source of ALF to finance litigation.
Again, the post is here. For the click averse, here’s the original post:
Yes, my columns often include references to sports, music, movies, and TV.
No, this column is not about this Alien Life Form and his tv show:
Rather, this post is about Alternative Litigation Financing.
Earlier this year, I praised an advisory ethics opinion in which the Philadelphia Bar Association concluded that crowd funding litigation is not necessarily unethical. Crowd funding is an alternative method of financing many things, including litigation.
Last week, the ABA’s Law Practice Today blog ran a piece on Why Alternative Litigation Financing is Poised to Disrupt Litigation. It’s an interesting post that raises issues related to legal ethics, access to legal services, access to justice and, in a way, tech competence. It also gives me an excuse to use the word “champetry” for, perhaps, the first time since law school.
As I wrote in my post on the Philadelphia advisory opinion, the fact that something is new or different does not render it unethical. As ALF platforms continue to grow in popularity, remember that it is not a platform or technology that poses an ethics risk – – it’s the lawyer who uses the platform or technology. Indeed, the post in Law Practice Today quotes from a white paper that the ABA’s Commission on Ethics 20/20 issued in 2012:
- “[this]Report should not be interpreted as suggesting alternative litigation finance raises novel professional responsibilities, since many of the same issues…arise whenever a third party has a financial interest in the outcome of the client’s litigation. A lawyer must always exercise independent professional judgment on behalf of a client… “
In other words, ALF is permissible as long a lawyer doesn’t violate any other rules while representing a client who uses ALF to pay for the lawyer’s services.
A few rules more likely to arise than others:
- Rule 5.4(c) states that a “lawyer shall not permit a person who recommends, employs, or pays the lawyer to render legal services for another to direct or regulate the lawyer’s professional judgment in rendering such legal services.”
- Rule 1.8(f) prohibits a lawyer from accepting “compensation from one other than the client unless:
- (1) the client gives informed consent;
- (2) there is no interference with the lawyer’s independence of professional judgment or with the client-lawyer relationship; and
- (3) information relating to representation of a client is protected as required by Rule 1.6.
Also, I’d suggest that having read this post, Rule 1.1 might come into play. The rule requires lawyers to provide competent representation to their clients. Arguably, the duty of competence includes advising a client who lacks resources on alternative sources of litigation financing. Is it a stretch to say that the failure to do so is unethical? Yes. But what would it hurt to keep a few of the ALF providers in mind? The post on Law Practice Today lists and links to 4 of them.
In any event, I urge you not brand crowd funding and other forms of ALF as unethical for no other reason than “that’s not how we’ve done it in the past.” Is it new? Yes. Is it different? Yes.
But, it’s not lost on me that one of the cases cited in the post on Law Practice Today involved a group of college students who turned to crowd funding to finance litigation that they otherwise could not have afforded. You too, some of my loyal readers, were once on the cutting edge, doing things that left more senior lawyers fretting for their licenses: like using fax machines.
Attorney Stephen Embry authored the post that appears on Law Practice Today. In it, he lays out some of the concerns with ALF, but then provides strong counter-arguments to those concerns. Above all, his final paragraph bears keeping in mind:
- “Balanced against the risks is the upside. In a world where over 60% of small businesses who experienced a legal event in the past two years report not hiring a lawyer (LegalShield Survey Report ), where 80% of the legal needs of the poor and middle class go unmet (See Legal Service Report)and where some 40% of law school graduates can’t find full time jobs (ABA 2015 Report) anything that tears down barriers to justice and allows an underserved population to be served may be worth the risk.”