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California lawmakers are set to vote before the end of the month on legislation that would allow the California bar to test new legal service models to make them more affordable. An amended version of the bill would still prevent non-lawyer companies from co-owning firms, however, and ban the sharing of legal fees with non-lawyers, thus preventing firms from going public or taking investments from litigation funders and others. Despite these developments, William Farrell Jr. of Longford Capital still predicts that California will eventually loosen its regulations.
The SEC’s enforcement lawyers and examiners are moving closer to gathering data on investments hedge funds make in support of litigation, as the financing arrangements grow in popularity. Under the proposed reporting, funds would be required to disclose the percentage of their money that goes toward litigation finance, as part of a net asset value calculation that excludes liabilities.
Annie Pavia of Bloomberg Law shares the results of Bloomberg Law’s 2021 Litigation Finance Survey, revealing that the majority of litigation funders (56%) reported that their business increased even in the middle of the economic downturn last fall and a slightly larger percentage (59%) said they have more business now than they did before the downturn began.
Big Law has a long track record of internal squabbles over contingent fee payments and, despite the role that litigation funding plays in the increased use of contingent fee billing, lawyers are not interested in the advice of litigation funders on how best to structure compensation decisions, according to sources at two major litigation funders.
Famed New York trial lawyer Bill Carmody explains why the majority of his plaintiff-side cases are "pure" contingency fee arrangements, even though such arrangements are increasingly rare in “bet the company” courtroom battles where hybrid arrangements and third party funding have made it easier for everyone to hedge their wagers.

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