Ensuring funders remain independent of lawyers

published Aug 26, 2013
The policy considerations for requiring the traditional fiduciary duties of lawyers to their clients to be unfettered by any third party funding are compelling. Protection of this fiduciary relationship from commercial influences is a primary consumer protection mechanism. Any fettering of these duties will diminish the structural protections enjoyed by clients in equity that have stood the test of time; protections that are at the front line when clients confront the need for litigation funding.

The policy considerations for requiring the traditional fiduciary duties of lawyers to their clients to be unfettered by any third party funding are compelling.  Protection of this fiduciary relationship from commercial influences is a primary consumer protection mechanism.  Any fettering of these duties will diminish the structural protections enjoyed by clients in equity that have stood the test of time; protections that are at the front line when clients confront the need for litigation funding.

At present, clients can expect, and regulators of the legal profession can require, lawyers not to put their clients’ interest in potential conflict with their personal interests and, in particular, not to profit in such circumstances.

These duties are the hallmark of the legal profession and the foundation of the profession’s right to self regulate and its reason for existence. They are also why the community by and large holds lawyers in high esteem.  Requiring that funders be licensed and remain independent from lawyers throughout proceedings protects the sanctity of the legal profession and enables access to justice. (For more on licensing of litigation funders, see Litigation funding regulation for consumers - not the big end of town.)

Funders ought to be prohibited from holding any interest - financial or through common office holders - in the law firm conducting the claim being funded.  It is in the interest of all concerned for there to be a clear demarcation between funding and legal services.