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Lawsuit Settlement Cash Funding Law and Ethics Commentary
(Settlement Cash Funding)

Law and Ethics Commentary

Following is a sampling of statements from commentators, industry participants, and courts regarding litigation funding, settlement cash funding and other plaintiff litigation funding:

Brooklyn Law School Prof. Anthony J. Sebok, “The Ohio Legislature Wisely Enacts a Law to Supersede an Ohio Supreme Court Decision that Had Limited How Litigation Could Be Funded,” Findlaw.com, September 8, 2008 (available at findlaw.com).

(On May 28, 2008, Ohio Governor Ted Strickland signed into law House Bill 248, creating a regulatory system under which legal finance companies can operate in Ohio.)

“One cannot expect justice if the outcome of a lawsuit depends on which party has greater financial staying power.”

Hofstra Univ. Prof. Susan Lorde Martin, 33 University of Michigan Journal of Law Reform 57, 86 (1999/2000).

(Settlement cash funding gives the plaintiff staying power in the face of well-funded defendants.)

“Experience supports the conclusion that deep-pocketed defendants use the fact of the plaintiff’s inability to fund the cost of litigation to wear the plaintiff down and encourage the settlement of claims well below their true value.”

N.Y.U. Prof. Stephen Gillers, quoted in “David v. Goliath revisited: Funding companies help level the litigation playing field,” Trial (ATLA, May 2001).

(Settlement cash funding allows the plaintiffs to wait for a fair settlement.)

Plaintiff funding “helps plaintiffs resolve their cases solely on the merits, not on the respective financial conditions of the parties.”

Article in The New York Times, May 19, 2003, at A15 (quoting Merit Brief of Amicus Curiae in Interim Settlement Funding Corp. et al. v. Roberta Rancman, No. 01-2154 (Ohio Sup. Ct., filed May 9, 2002), at 3).

(Settlement cash funding puts a plaintiff in a position to resolve the case on merit alone.)

“Those seeking to acquire an interest in another’s litigation don’t acquire the right to control the legal strategy or intervene in the attorney’s ability to make judgments. If the company does not involve itself in the legal strategy of the case, I would see no inherent conflict in the process.”

George Kuhlman, Ethics Counsel to the American Bar Association, quoted in Miami Daily Business Review, July 14, 2000, at 9.

(Settlement cash funding meets this criteria.)

“When both parties in the litigation are equally well financed and thus do battle on a level playing field, it is more likely that the case will actually be decided on its merits and not on issues of cash flow, costs of discovery, and other monetary concerns.”

Hofstra Univ. Prof. Susan Lorde Martin, 30 American Business Law Journal 485, 504 (1992).

(The playing fields are level with settlement cash funding.)

“[Where] funds are necessary to forestall eviction or to put food on the table…, the client may feel compelled to accept a settlement offer not in the client’s best interest simply in order to survive financially…. An attorney who informs a client with limited resources that financial assistance may be available through established financial institutions can obviously be of material help to the client.”

New Jersey Advisory Committee on Professional Ethics, Opinion 691, 163 N.J.L.J., 220 (2001).

(Settlement cash funding can help a plaintiff handle pressing financial needs so the attorney can continue pursuing a truly fair resolution.)

“[A]greements to purchase an interest in an action may actually foster resolution of a dispute.”

Massachusetts Supreme Court in Saladini v. Righellis, 426 Mass. 231, 687 N.E.2d 1224, 1226 (1997).

(When the defense knows the plaintiff has enough money from settlement cash funding to wait, it changes the equation.)

“Funding of litigation by a non-party can be petitioning to the same extent that filing a lawsuit itself is petitioning…. Indeed, non-parties often provide aid to litigants, whether through financial backing, legal assistance, amicus briefs, or moral support…. The realities often are that litigation cannot be entirely financed out of the pocket of the party bringing suit…. The First Amendment freedoms of petitioning and of association protect groups who for whatever reason want to contribute to a law-suit openly or to stand apart from public view while another party files a lawsuit….”

U.S. Court of Appeals in Baltimore Scrap Corp. v. David J. Joseph Co., 237 F.3d 394, 401 (4th Cir. 2001) (citations omitted).

(Settlement cash funding is protected by the First Amendment, according to this court.)

“It sometimes may be useful and convenient, when one has a just demand which he is not able from poverty to enforce, that a more fortunate friend should assist him, and wait for his compensation until the suit is determined, and be paid out of the fruits of it.”

South Carolina Supreme Court in Osprey, Inc. v. Cabana Ltd. Partnership, 340 S.C. 367, 532 N.E.2d 269, 276 (2000) (quoting Metropolitan Life Ins. Co. v. Fuller, 61 Conn. 252, 23 A. 193, 196 (1891)).

(LightHouse isĀ  “a more fortunate friend” to you if you are in need of settlement cash funding.)