Originally from Handbook on Third-Party Funding in International Arbitration, Second Edition

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I.  Introductory Note

This analysis assumes that the form of third-party funding (”TPF”) at issue is “client-directed” funding, where the party and counterparty in the transaction are the funder and the client with a claim.  This analysis is based on the current rules of professional responsibility and legal obligations of attorneys as revealed by court decisions in the United States without regard to whether the attorney’s legal services occur in an arbitration or non-arbitration context.  Given that the Model Rules of Professional Conduct (“MRPC”) explicitly distinguish the obligations of attorneys in arbitration from other adjudicative and non-adjudicative legal practice very rarely,  and in contexts not relevant to TPF, there is no basis for assuming that the obligations of an attorney in arbitration will vary from an attorney’s obligations in general in the context of this discussion.

II. Relevant Ethics Rules

Before discussing the duties, if any, that an attorney may owe third parties, it is important to establish the range of possibilities available to the attorney.  Therefore, it is necessary to establish the circumstances under which it is unethical for an attorney to assume duties to third parties. In the MRPC, the following rules are relevant to this issue.