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Firm Lawyers Wary of Portfolio Litigation Financing (Bloomberg)

Bloomberg, March 5, 2020

Firm Lawyers Wary of Portfolio Litigation Financing

Even though portfolio funding is a relatively common and accepted practice in the industry, there is some question in the market about the ethical implications of the practice. This has been especially true since a 2018 New York City Bar Association opinion suggested that law firm portfolio funding arrangements violate New York Rules of Professional Conduct Rule 5.4, which prohibits lawyers from sharing legal fees with nonlawyers. Specifically, the opinion (which is advisory and not binding) states that certain funding arrangements—namely, those in which a lawyer’s future payments to a funder are contingent on the receipt of legal fees received in one or more specific matters—run afoul of this ethics rule (although the future of this rule might be in flux).

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