Champerty, Maintenance and Barratry
Most jurisdictions have relaxed or abolished the prohibitions of Champerty, Maintenance and Barratry, which previously barred a third-party investment in legal claims. For example, the Nevada Supreme Court ruled that a plaintiff can assign a portion of settlement proceeds from a tort claim as long as the plaintiff retains control of the lawsuit. Achrem v. Expressway Plaza Limited Partnership, 917 P.2d 447 (Nevada 1996); rehearing denied, 1996.

Our funding process leaves all decisions relating to the litigation to the Plaintiff and his or her attorney. Equity Litigation Funding, LLC does not participate in the litigation or render legal services in any way.

Usury Laws
Most states have usury laws which set the maximum amount of interest that can be charged on a loan. For example, the state of Nevada has abolished the usury law. See NRS 99.050. Equity Litigation Funding, LLC is not a bank or finance company and we do not make traditional “loans” that are subject to the laws on usery.

We invest in legal actions and because our advances are not repaid if the Palintiff is unsucessful, this contingency prevents the advance from constitiuting a "loan". In other words, a contingent advance, secured by a speculative recovery from a lawsuit does not constitute a loan that is governed by the laws on usery.

Ethical Considerations
In most jurisdictions, nothing prohibits a lawyer from advising clients about the availability of non-recourse funding services. In fact, many jurisdictions have issued ethical opinions approving of an attonry's referral of a client for such services. However it is important that the lawyer's role be limited by the following restrictions:

1. A lawyer or his or her firm cannot cosign or guarantee repayment of his client’s loan; only client remains ultimately liable.
2. A lawyer can refer his or her client to a 3rd party who could lend money to the client or purchase a portion of the client’s tort claim if the following conditions are met:
   
   • the 3rd party is not affiliated with the lawyer;
   • the lawyer obtains no fee or commission for the referral;
   • the lawyer gives no assurances to the 3rd party as to the conduct or likely outcome of the litigation;
   • the lawyer does not give the 3rd party any right to control the conduct of the litigation;
   • and that the lawyer would conform to Canon 4 and the rules relating to the confidences and secrets of a client.

see: Mass. State Bar Association Opinion No. 83-7; Tennessee advisory Ethics Opinion 99-A-666; Virginia Ethics Opinion 1155; Ohio State Bar Association Opinion No. 94-8; Illinois State Bar Association Opinion No. 92-9. However, some states are more liberal than others and allow the Attorney to accept a referral fee or commission.

A sample group of opinions addressing the propriety of litigation funding is listed below. For more specific information on the laws and opinions relating to litigation funding in your jurisdiction, please contact Equity Litigation Funding, LLC.

Kentucky - Opinion SCR 3.130, Opinion E 383, Opinion E 375

Virginia - Legal Ethics Opinion No. 1379, Opinion No. 1471, Opinion No. 1441, LE Op. 1155,LE Op. 1219, LE Op. 1269

South Carolina - Ethics Advisory Opinion 90-40, Opinion 92-06, Opinion 94-04

Texas - Opinion 465 (10/90)

Washington - Formal Opinion 185 (1990)