RK&O Client Alert: "New York City Bar Opinion Stuns the Litigation Finance Markets"

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August 16, 2018

On July 30, 2018, the New York City Bar announced in Opinion 2018-5 that the prohibition in Rule 5.4(a) prohibits nonrecourse financing arrangements between lawyers and litigation funders because the lawyer’s payments to the funder are contingent on the lawyer’s receipt of legal fees. This shocked both the investment and the legal communities by throwing a monkey wrench into what has become an increasingly popular area of focus for high yield investment firms and an easy, cost-efficient source of financing for law firms: the provision of financing to law firms with recourse solely to the proceeds of one or more successful litigations. 

In this client alert, RK&O partners Paul B. Haskel and James Q. Walker discuss the details of this opinion and what it could mean for lawyers involved in certain nonrecourse financing arrangements.  

Click here to read the full client alert.