American Bar Association formal opinions on litigation funding.
The ABA has addressed third-party litigation funding across multiple formal opinions and model rules. These form the primary ethical framework that attorneys rely on when advising clients about pre-settlement funding.
The ABA's most comprehensive guidance on third-party litigation funding. Addresses attorney disclosure obligations, scope of review required when clients enter funding agreements, confidentiality considerations, and the limits of permissible funder involvement. Establishes that attorneys must review any funding agreement before a client signs and must advise clients of material terms.
Governs attorney financial assistance to clients in litigation. The rule prohibits attorneys from providing financial assistance to clients in connection with contemplated or pending litigation, with narrow exceptions. Third-party pre-settlement funding is explicitly a separate product category — not attorney financial assistance — and is not governed by this rule. However, the rule shapes how attorneys interact with funders.
Client confidentiality obligations apply when attorneys share case information with third-party funders. Opinion 484 addresses this directly: attorneys may share confidential information with funders under Rule 1.6(a) if the client provides informed consent, but must take care not to disclose more than necessary. Common interest doctrine may also apply in certain commercial funding relationships.
Prohibits fee sharing with non-lawyers and structures that would compromise attorney professional independence. Third-party litigation funding does not implicate Rule 5.4 where the funder has no control over the attorney or legal strategy and receives a return only from case proceeds — not from attorney fees. The distinction between case-level financing and fee-sharing arrangements is a recurring analytical focus of state bar guidance.
Selected state ethics opinions on litigation funding.
State bars in major litigation jurisdictions have issued guidance on attorney obligations in the context of pre-settlement funding. Criterica Capital monitors state bar opinions across all 39 states and Washington DC where we operate.
This is a representative selection. State bar guidance continues to develop. For current guidance in a specific jurisdiction, consult the relevant state bar's ethics resources or contact our compliance team.
Champerty, maintenance, and privilege — the doctrinal landscape.
Third-party litigation funding engages several common law doctrines that have evolved significantly over the past two decades. Understanding this framework helps attorneys structure compliant funding arrangements.
Historically, champerty — profiting from another's lawsuit — was a common law prohibition that could invalidate litigation funding arrangements. Most US jurisdictions have substantially reformed or abolished champerty doctrine as applied to third-party funding. Courts in New York, California, and most other active litigation states have held that properly structured funding agreements do not violate champerty doctrine.
The related doctrine of maintenance — providing support for another's lawsuit — has similarly been reformed in most US jurisdictions. Courts have distinguished between improper intermeddling and legitimate capital access for plaintiffs. The critical factors are whether the funder exercises control over the litigation and whether the structure serves a legitimate economic purpose.
The common interest doctrine may protect communications between attorneys, clients, and litigation funders where there is a shared legal interest. Courts have reached different conclusions on whether funder communications are protected, with outcomes depending on timing, the nature of information shared, and whether a common interest agreement is in place. Best practice is to establish a written common interest agreement at the outset of the funding relationship.