Opinion 2012-3, issued by the Board of Commissioners on Grievances and Discipline of the Ohio Supreme Court on December 7, 2012, sets out the ethical obligations for Ohio lawyers if a client pursues a non-recourse civil litigation advance regulated by Ohio Revised Code 1349.55. First, the Opinion advises that Ohio lawyers may inform clients of such advances offered by alternative litigation finance (ALF) providers.
The Opinion notes that “non-recourse civil litigation advance contract” is the statutory term for consumer legal funding in Ohio under R.C. 1349.55. This section was enacted in 2008 to address the Ohio Supreme Court’s decision in Rancman v. Interim Settlement Funding Corp., 99 Ohio St.3d 121, 2003, holding that “[e]xcept as otherwise permitted by legislative enactment or the Code of Professional Responsibility, a contract making the repayment of funds advanced to a party to a pending case contingent upon the outcome of that case is void as champerty and maintenance.” According to the Opinion, as of June 2012, Ohio, Nebraska, and Maine are the only states that have enacted consumer protection laws concerning civil litigation advances.
If the client of an Ohio lawyer pursues such an advance, the Opinion states that lawyers must recognize the ethical obligations the transaction creates. These ethical obligations, pursuant to applicable Rules of Professional Conduct are:
- Rule 1.1 states that the lawyer must be able to provide competent advice about a civil litigation advance. This may require outside study, consultation with a lawyer experienced in consumer litigation funding, or a referral to another lawyer for an independent review.
- Rules 1.4 and 2.1 provide that the lawyer shall communicate with the client about the transaction and provide candid advice, to include the true cost of the advance and the impact it may have on a potential settlement.
- Rules 1.4 and 1.6 advise that the lawyer has duties of independent professional judgment and confidentiality. The lawyer may not reveal the identity of the client to an ALF provider or disclose information (even for records that may be maintained in a repository of public records) without the client’s informed consent. The discussion with the client to obtain informed consent to share information with an ALF provider must include the potential waiver of the attorney-client privilege and its consequences.
- Rule 2.3 will likewise require the informed consent of the client for the lawyer to provide a case evaluation to the ALF provider, as said evaluation may materially and adversely affect the client’s interests.
The Opinion states that it is neither an endorsement nor a condemnation of ALF. For a full text of the Opinion, please see www.sconet.state.oh.us/Boards/BOC/Advisory_Opinions/2012/Op_12-003.