In our latest episode of Remotely Ethical, we discuss a recent Ninth Circuit decision that may have significant implications for New York litigation funding arrangements.
In this episode we discuss:
- Fast Trak Investment Co. v. Sax et al., No. 18-17270 (9th Cir.), where the Ninth Circuit certified a question the New York Court of Appeals, as to whether a particular litigation funding agreement constitutes a loan or an investment.
- If the arrangement constitutes a loan, it may violate New York's civil and criminal usury statutes, which cap certain loans at 16%.
- The importance of carefully selecting your choice of law provisions in litigation funding agreements, due to the significant variations in how different jurisdictions treat litigation funding.
- People v. RD Legal Funding, LLC, No. 2020 N.Y. Slip Op. 31382(U) (N.Y. Sup. Ct.), a New York case that the Court of Appeals may consider when it evaluates whether the litigation funding agreement at issue in the Fast Trak case is a loan versus an investment.
- New York City Bar Ethics Opinion 2018-5, which opined that a non-recourse litigation funding agreement between a litigation funder and a New York lawyer constitutes fee-sharing in violation of Rule 5.4 of the New York Rules of Professional Conduct.
- A report issued by the New York City Bar Litigation Funding Task Force that recommends amendments to Rule 5.4, to allow lawyers to enter into certain non-recourse litigation funding agreements.
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