Proceed With Caution With Third Party Litigation Funders

Litigation funders can help firms conduct expensive cases, but they must be conducted extremely carefully, says the former head of the Irish Law Society.


Photo by Tingey Injury Law Firm on Unsplash
Photo by Tingey Injury Law Firm on Unsplash
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LONDON (Within the Law) - Law firms should be wary of getting too close to litigation funders, for fear of a conflict of interests. That’s the warning given by the former president of the Irish Law Society, the Law Gazette Reports.

Speaking at the International Bar Association’s annual conference Geraldine Clarke said third party lawyers created a particularly difficult problem for lawyers who are stuck between twin rocks of seeing the law done and keeping investors happy. 

‘In the UK, we have seen a lot of third-party funders becoming quite close to some of the law firms,' she said. 'They would be, for example, the funder of choice for those lawyers’ clients. Issues have been raised in a number of cases about where the obligations of the lawyers lie and, more importantly, where their heart is,” she said.

Clarke is a senior partner at Dublin based Gleeson McGrath Baldwin Solicitors and is also a former chair of the IBA's professional ethics committee.

The Republic of Ireland currently bans third-party litigation funders. However, she said that agreements must be carefully drawn up to limit the role of funders in how litigation is conducted. Before entering into any of these agreements, she advised funders to seek legal advice. 

Although she did not name any names, she speaks at a time when a number of high-profile deals have been announced between firms and funders. DLA Piper teamed up with two funders earlier in the year to help pursue cases which would otherwise have been too expensive. 

For those in favour of such deal, funders unblock financial impediments to justice. However, whenever money and the law come into contact, problems are not far behind. 

(Written by Tom Cropper, Edited by Klaudia Fior)

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