Tread Carefully With Litigation Crowdfunding
The introduction of third-party money triggers a host of complex ethical concerns.
November 03, 2015 at 11:06 AM
6 minute read
On April 4, 2015, South Carolina police officer Michael T. Slager shot and killed Walter Scott following a routine traffic stop. The now infamous video which surfaced following the shooting shows an unarmed man being shot multiple times in the back while he was running away. Following the shooting, a crowdfunding campaign was started on GoFundMe.com in order to support the officer's legal defense fund. However, the campaign was shortly thereafter removed from the website, with officials from the website reporting that the campaign violated its terms of service. While the officials never specifically delineated what violation occurred, GoFundMe's terms and conditions page states that “campaigns in defense of formal charges of heinous crimes, including violent, hateful, or sexual acts” are prohibited.
The ethics of GoFundMe's prohibition were relatively straightforward. The website determined the campaign itself was supporting an unethical cause and was prohibited. But attorneys seeking money through crowdfunding must consider a whole host of more nuanced and complicated ethical concerns, as the introduction of third-party money will often conflict with myriad duties attorneys owe to clients.
Third-party lenders will often want as much information as possible about the client and the litigation, but disclosing this information will often run afoul of the duties of confidentiality owed to clients. Even when the client is voluntarily disclosing information to a third-party funding agency, simply putting your client in the position where he must choose between disclosing information he would rather keep confidential or raising the capital to fund his litigation is an ethical gray area. Additionally, if an attorney takes on too much in loans, he may run the risk of letting the repayment of the loans dictate decisions in the case. For example, an otherwise reasonable settlement offer may not be too appealing to an attorney who has over-leveraged his case, and he may be incentivized to risk trial in hopes of a large verdict that will sufficiently cover the debt. There may also be concerns about fee-splitting with nonattorneys, depending on how the deal is structured.
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