Are the existing ethical rules up to the challenges of complex litigation? With what kinds of modifications? And do courts even have authority to incorporate ethical rules into complex litigation? Some courts claim to derive their authority from their inherent powers. Others base them on a conflict—or at least tension—between Federal Rule of Civil Procedure 23 and the local rule through which most federal courts adopt the ethical rules of the state in which they are located. Yet other court seem to believe they are bound to apply the ethical rules mechanically to class actions and other complex litigation. Which approach courts take to these and related issues can have profound effects on how judges and lawyers conduct themselves, including whether plaintiffs’ counsel and defense counsel can communicate with absent class members and whether conflicts of interest disqualify class counsel when they disagree with the named plaintiffs about whether to accept a settlement.
Plaintiffs in complex litigation recover tens of billions of dollars each year. The attorneys representing them are paid hundreds of millions of dollars. Only recently have courts begun to address a large and growing source of capital to pursue this litigation: private funders. They can take various forms. Some of them provide lines of credit to plaintiffs’ law firms. Others provide loans secured only by individual cases, often as part of a portfolio. Yet others may provide a loan to clients directly. These arrangements themselves likely involve hundreds of millions of dollars each year, although the precise amount is unknown. Related ethical issues include whether law firms are sharing their fees with non-attorneys, whether they are improperly ceding control of litigation to non-attorneys, and whether they are following the ethical rules for receiving compensation for their services from non-clients.
Panel 3: Diversity, Equity, and Inclusivity in Complex Litigation
This panel involves diversity, equity, and inclusivity (DEI). Courts and commentators have noted that the same law firms and lawyers seem to represent plaintiffs and proposed classes in litigation. That pattern is understandable to an extent. Lawyers need capital and experience to serve their clients’ interests effectively. But the pattern also can perpetuate a history of systemic bias, including against women and people of color. Plaintiffs’ lawyers and courts may have an ethical duty to balance these and other competing considerations to improve diversity, equity, and inclusivity in the practice of complex litigation.
Before class certification, putative class members have no attorney-client relationship with counsel. When, and under what conditions, can class counsel, the defendant, or defense counsel communicate with such class members? How does that relationship change after certification? What if the class members and the defendant have an ongoing business relationship, such as an employee-employer relationship or a customer/consumer-business relationship? Could, for example, a business served with a putative class-action lawsuit brought by customers require its customers to agree to a no-class arbitration agreement?
