We have great news for contingent-fee firms in West Virginia. In response to a request made of the Office of Disciplinary Counsel surrounding the ethical practice of passing through borrowing costs to clients, the Disciplinary Counsel published Opinion L.E.O. 2016-01.
The Opinion states:
“Based upon a review of these opinions and applicable West Virginia Rules of Professional Conduct, this Board finds that a lawyer or law firm may obtain a loan from a third party lender to advance the costs and expenses of litigation in a contingent fee matter and that the attorney’s costs and interest associated with the loan may be deducted from the client’s portion of the settlement or judgement provided that certain conditions, prescribed under the Rules of Professional Conduct, are met.”
You can read the entire opinion here.
Opinions like this from West Virginia are not new to our business. In fact, there are many other states who have issued similar opinions that allow for the pass through of borrowing costs to individual cases.
What does this potentially mean to your law firm? You no longer have to fund your litigation costs out of your firm’s after-tax profits. Imagine if you were able to recover what you have invested in your litigation costs.
If that money was sitting in your operating account, do you think you could find something productive to do with it?
Powered by our proprietary AdvoTrac® software, case-by-case borrowing cost pass through is the cornerstone of our business. It allows us to deliver capital to our clients at an average cost of less than 1% per year. Click here to learn more.
Click here to contact us if you would like a copy of the West Virginia opinion or to see if a similar opinion has been issued for your state. We are happy to pass it on to you.
Photo Credit: Robert Biedermann