The State Bar of California is the latest to weigh in on the ethical issues that arise for lawyers when a client seeks third-party funding. Formal Opinion No. 2020-204 reflects the relatively well-established use of litigation funding in the state and is largely consistent with the conclusions reached by courts and bar committees across the country. The conclusions are straightforward: The existing rules of professional conduct suffice to protect clients seeking funding; funding may implicate a lawyer’s duty of competence, to maintain independent professional judgment, or of confidentiality; but all such issues are manageable with proper care and disclosure (where called for).

The opinion highlights several important themes.

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