lalegalethics.org

Louisiana Legal Ethics – A legal ethics blog of Prof. Dane S. Ciolino

Legal services in the United States generate hundreds of billions of dollars annually, much of it in contingency and plaintiff-side litigation where a single verdict or settlement can return multiples on invested capital. For PE firms and hedge funds accustomed to finding undervalued, fragmented industries and consolidating them, law firms look like an untapped market. The case for outside investment isn't purely about profit. Proponents argue that capital infusion allows firms (particularly smaller plaintiff-side and contingency practices) to take on more cases, invest in technology, and compete with better-resourced defendants. Litigation is expensive to fund and sometimes financially risky. Outside capital, in this view, expands access to justice by allowing firms to file cases they otherwise couldn't afford to pursue. We have written about related questions before, including how litigation financing arrangements must be structured to avoid running afoul of Rule 5.4. The …