The Trial Lawyer Fall 2017 - Page 30

financing companies with fees earned from their cases. If a financing company chooses to fund a practice that is drumming up frivolous lawsuits, it risks not earning a return on its investment. Myth #4: Loyalty And Independent Judgment Are Jeopardized By Taking Financing. It is well established that loyalty and independent judgment are essential elements in a lawyer’s relationship with a client. Conflicts of interest can arise and subject an attorney to discipline when a third party’s interests or the lawyer’s own interests pose a significant risk to the lawyer’s ability to consider, recommend or carry out the appropriate course of action for their client. Opponents of law firm financing contend that the acceptance of funding from a third party creates such a conflict of interest. The theory is that the lawyer’s interest in repaying the law firm financing company and the law firm financing company’s interest in being repaid will take precedence over what is best for the client. However, the perception that receiving capital from a law firm financing company will endanger the attorney-client relationship is unfounded. Rather, litigation financing often provides lawyers the resources necessary to zealously advocate for their clients. With additional capital, an attorney has the power to hire the best experts, pay expenses that escalate over years of protracted litigation and try a case to verdict or file an appeal despite the cost. In addition, similar to the reason why law firm financing companies do not fund practices that file frivolous lawsuits, it is in the best interest of the company not to interfere with a lawyer’s independent professional judgment. The purpose of providing funding to law firms is to increase the profits of the law firm, which in turn will benefit the financing company. Endangering a lawyer’s license to practice law does not serve this purpose, nor does influencing the attorney to take actions that would not be in the best interest of the client. Plus, many states have positive ethics opinions dealing directly with this issue. The fact is that despite these myths, law firm financing companies remain in business because they provide attorneys a necessary resource — the capital they need to pay case expenses, operate their practices and to survive the peaks and valleys in cash flow that are inherent to a contingent fee practice. 28 x The Trial Lawyer