Get ready for the rise of firms whose business plan is to bankroll lawsuits. [NYLJ]
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Apart from the name, how is this not illegal fee splitting? Just because the third party isn’t being paid out of the attorney’s contingency fee doesn’t mean that it doesn’t pose all of the same problems. It’s one thing to let Bob’s Widget, LLC assign a chose in action. It’s another thing entirely to have a third party paying counsel’s bills during the course of representation. This is bad and there’s no two ways about it. The course this sort of thing has taken in the UK (with non-legal businesses acquiring interests in law firms, etc.) militates against, certainly not in favor, of this kind of thing.
A better question might be how is this not champerty and maintenance?
The article seemed to admit that it is. Apparently champerty and maintenance are no longer illegal in a large number of states.
I didn’t think it was legal in the United States to do fee sharing ie. split fees. I knew most companies would do the advance but never thought they could buy part of the case.
Here is another article that confirms this here in the U.S. http://www.lawleaf.com/faqs/litigation-funding.html
I’m assuming this will be handled as an asset class here in the U.S.?
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