The Economics of Fiduciary Litigation (in 2 parts)

I‘ve reached that annual ritual known as “let’s clean off my desk because that is more fun than grading exams.”  Always a good opportunity to find a few treasures that escaped my closer attention during the academic year.  And along that line, I was intrigued to find the two-part series on “Alternative Litigation Finance,” written by Holland and Knight attorneys Robert Barton and Wendy Walker.

Part 1:  The Waiting Game — The Economics of a Fiduciary Litigation Practice. Here’s an excerpt:

What Is Alternative Litigation Finance? The structure of a litigation finance deal can vary significantly depending on the type of case, the company involved, the stage of the case when funding is sought, the amount of money requested, and many other factors. At its core, though, ALF is the advancement of funds to attorneys or clients by a thirdparty company to pay legal fees and costs related to litigation. In general, a litigation funder makes a return on the funds, whether through interest earned over the life of the advance, a multiple of the advanced amount, or a percentage of the recovery paid to the client at the conclusion of the matter. The transaction is typically nonrecourse, meaning the company only recovers to the extent that the client recovers. The funder does not look to the client’s other assets, beyond the settlement or judgment, to satisfy the repayment of the funds. In some circumstances, however, the client may offer additional collateral to secure the amount needed.

Part 2:  The Ethical Do’s and Don’ts: Best Practices when Clients Finance Fiduciary Litigation. To whet your appetite:

To provide maximum protection for the client, at the outset of a new matter, an attorney should request a written confidentiality agreement among the funder, the client, and the attorney. The agreement should provide the express recognition that any nonprivileged, but confidential, information that is shared is done so with the intent to maintain its confidential nature. Although not a full guarantee against future disclosure, such an agreement does demonstrate the intention of the parties and has been a persuasive argument to courts evaluating disputed discovery issues.

These articles originally appeared in the ABA’s publication, Probate and Property, with the second of the two articles published in the November/December 2015 issue.  (The good news is that by waiting a bit, both of these articles are now available on the web, and not just through the ABA subscription.)