This article covers some of the practical and ethical questions that arise in connection with litigation funding, focusing specifically on some of the ABA Model Rules of Professional Conduct that directly or indirectly implicate litigation funding. An earlier two-part version of this article appeared in a newsletter of the State Bar of California.
Opportunities and Challenges of Contingency Fees
Attorneys practicing solo or in small firms are particularly well suited to benefit from litigation funding. Litigation funding is often used in the context of contingency fee cases, and attorneys practicing solo or in small firms are more likely than those practicing in larger firms to take cases on a contingency basis. In any contingency fee cases they do take on, the individual lawyers handling the matters are also likely to enjoy more of the upside of any success and more of the downside of any failure, as compared with their big law counterparts. Litigation funding can enable attorneys practicing in small firms or as solos to take on more cases on a contingency or blended/hybrid fee basis and to share the risk of doing so with a funder.