The Rules of Professional Conduct impose various restrictions relating to attorney fees and the payment of litigation costs, which are designed to preserve the lawyer's role as a zealous but objective advocate. Class actions stand apart from other kinds of litigation in that they are designed to promote efficiency by their combining like claims into single actions, and individual justice by their vindicating claims that if taken individually might not be economically viable. In light of these special concerns, the courts have carved out several exceptions to ordinary attorney's fees, litigation expense, and disbursement rules that they routinely apply to class action cases. These special allowances include special compensation for class representatives, additional recovery for expert plaintiffs, and up-front payments of litigation costs by attorneys. While, as some courts have recognized, innovations in the class action context create some ethical risks, this should not lead courts to sound the death knell for creative financing of class action litigation. Rather, courts should approach creative class action financing arrangements with an eye towards the special circumstances and goals of class action litigation. Creative financing arrangements that prejudice plaintiffs' cases should be viewed with appropriate skepticism. Arrangements that merely provide financing attorneys with reasonable returns on their investment in light of prospective expenditures of time and effort, however, should be allowed in order to achieve the unique goals of class action litigation.
Daniel J. Capra, Thomas W. Jackson, and John Koeltl,
Financial Arrangements in Class Actions, and the Code of Professional Responsibility,
20 Fordham Urb. L.J. 831
Available at: https://ir.lawnet.fordham.edu/ulj/vol20/iss4/2