Can I Pass The Litigation Cost Protection Premium Through to My Client?

September 28, 2021

September 28, 2021

Can I Pass The Litigation Cost Protection Premium Through to My Client?

YES! In this Journal entry, we’ll discuss how the ethics landscape evolved to permit the treatment of Litigation Cost Protection’s premium as a reimbursable case cost.

The Florida Journey  

LevelEsq’s founders, Larry Bassuk and Justin Leto, are both members of the Florida Bar. After the launch of Litigation Cost Protection (“LCP”) in 2016, they began the process of obtaining a written ethics opinion from the Florida Bar that would permit the premium ‘pass through.’ It was the beginning of a winding road that ultimately led them to Tallahassee to make their case to the Florida Bar Board of Governors.  

The analysis raised many intriguing issues and even sparked a little controversy: Does LCP benefit the attorney, the client or both? Does LCP create a conflict of interest? What are the boundaries of freedom of contract between attorneys and clients? Is this champerty? Does a contingency fee compensate an attorney for taking on cost risk in the first place?  

These were just some of the issues raised by the various Florida Bar Ethics Committees as the matter made its way through the ranks. Five-minute hearings routinely turned into hours-long Q&A sessions and debates. Being a matter of first impression, many committee members were equal parts curious and passionately opinionated.  

Ultimately, the Florida Bar Board of Governors approved a Florida Bar Staff Opinion that permitted the treatment of an LCP premium as a reimbursable case cost if the attorney follows the guidelines contained in that Opinion. The well-reasoned Opinion comprehensively addresses the applicable Rules of Professional Responsibility and cites both theoretical and practical issues that were considered. The Opinion is informative for lawyers outside of Florida who decide to treat their LCP premium as a case cost, as the ABA Model Rules of Professional Conduct typically form the foundation of every state’s Rules of Professional Conduct, making the reasoning in the Opinion universal.    

Utah and North Carolina Follow

Soon after the Florida Bar’s Opinion, LevelEsq customers in Utah and North Carolina petitioned their respective Bars and both obtained favorable results. The Utah and North Carolina Opinions follow the Florida Bar’s reasoning and are, indeed, more streamlined and concise in their approach. They both also offer additional guidance on the type of disclosures that an attorney must make to his/her client if they decide to treat their LCP premium as a reimbursable case cost.  

Should I do it?

Yes, you should seriously consider the unique opportunity to treat your LCP premium as a reimbursable case cost and you should educate yourself on how to do it properly! You fight for your clients, take risk on their behalf and often loan them your own money (interest free) by advancing case costs (you should be using LevelEsq’s new Lawsuit Case Financing instead, by the way). You take on cases with tricky liability issues and provide people, who often lack resources, with access to our justice system. A contingency case is a joint undertaking between an attorney and client that can and should be enhanced with an innovative, mutually beneficial risk management tool: LCP.    

Making the case even more compelling is that, once you decide to pass the premium on to your client, you are fully protected. Either you win/settle the case and recover the premium from the proceeds of the settlement or you lose the case and get all your costs back through a claim. With LCP, you never need to worry about the costs. Instead, just focus on the case!      

Larry Bassuk
Co-Founder and President of LevelEsq

How can we help your firm?

Lawsuit Cost Financing

Quick and seamless access to capital to fund your case expenses.

Litigation Cost Protection

Protect the downside with insurance coverage for litigation costs.