Last week, the U.S. Chamber Institute for Legal Reform (ILR) submitted comments to the State Bar of California regarding potential rules changes that accentuate our long-standing concerns about third party litigation funding.
The California Bar is considering lifting the general ban on lawyers sharing fees with non-lawyers. It may also allow a lawyer to be part of a law firm in which a non-lawyer holds a financial interest.
If enacted, these rules could turn California courts into casinos and undermine attorney-client privilege by fueling third party litigation funding. These changes would make it even easier for funders to exert undue influence and control over litigation potentially pitting the financial interests of investors against those of a firm’s client.
These rules would not only fuel more litigation, but it would give attorneys another client: shareholders and others with a financial stake in the litigation. Third party litigation funding already invites questionable factors into litigation. These rules, though, would make the already problematic parts of this issue even worse.
ILR strongly urges the California State Bar to reject these proposed rules.