How Litigation Funding Can Help Small Firms and Solo Practitioners

The Summer issue of The State Bar of California’s publication, Big News for Solo and Small Firms (“Big News”), contained the second of Los Angeles Investment Manager David Gallagher's two-part series about how commercial litigation finance can help small firms and solo practitioners. This article examines some of the ethical questions that arise in connection with litigation funding, focusing specifically on the California Rules of Professional Conduct that directly or indirectly implicate litigation funding. The Rules discussed in the article include Rule 1-320 pertaining to fee splitting and referral fees, Rule 1-500 regarding agreements to restrict the right of a member to practice law, Rule 3-100 on disclosure of confidential client information and Rule 3-110 on failing to act competently. As litigation funding becomes more utilized, it is important for lawyers to understand how to use it as a resource without conflicting with the ethical rules.

Equally important for lawyers to understand are the various scenarios on how litigation finance can be applied on a single case basis for their clients or alternatively, on a portfolio basis for their practice. This topic, and several benefits litigation funding can offer to a small practice, were identified and highlighted in Part I of this article series.

Click to read Part 1 or Part II of this article series.