MONTH-IN-BRIEF (Apr 2018)
Ethical Competence: Developments re: Litigation Financing Entities
By Keith R. Fisher
Business lawyers representing entities engaged in third-party litigation financing (TPLF), a/k/a Alternative Litigation Financing (ALF), should be (and should make their litigator colleagues) aware of disclosure requirements in some (though not all) federal and state courts around the country. A recent research memo included in the agenda book (starting at p. 209) for the April 10, 2018, meeting of the Advisory Committee on the Rules of Civil Procedure shows that nearly half of the federal circuit courts and roughly a quarter of federal district courts have local rules mandating disclosure (for judicial disqualification purposes) of TPLF funders. The memo also summarizes substantive regulation of TPLF by statute in eight states.
Duty to Disclose "Material Error" to Current Client but Not Former Client
By Keith R. Fisher
The Standing Committee on Ethics and Professional Responsibility recently issued Formal Opinion 481, which states that a lawyer must inform a current client about any "material error" made by the lawyer in the representation. A "material error," according to the committee, exists where "a disinterested lawyer would conclude that it is (a) reasonably likely to harm or prejudice a client; or (b) of such a nature that it would reasonably cause a client to consider terminating the representation even in the absence of harm or prejudice." The duty to disclose material errors derives from the requirement in Model Rule 1.4(a)(3) and (b) to keep a client "reasonably informed about the status of a matter" and "explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation." As that rule applies only to current clients, the duty to disclose material error does not extend to former clients.