Ezel / Ethics Opinions / WISBAR
WISBAR 1983

Can an organization that is not a party to a class action pay the litigation expenses if it shares in no recovery?

Short answer: The opinion concluded that a nonparty organization may fund the litigation expenses of a class action, provided none of the contributed funds compensate the attorneys representing the class and the action is fully consistent with the rights and interests of the named parties.

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This page answers the general question as of 1983. Ezel answers yours: whether it's allowed on your facts, under the current rules of professional conduct in your state, with citations.

Currency note: this opinion is from 1983
Subsequent statutory amendments, court decisions, or later opinions or rule amendments may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.
Disclaimer: Advisory only. Not binding precedent.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official ethics opinion. The original opinion (linked on this page as a PDF) is the authoritative source for any reliance.
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Plain-English summary

Opinion E-83-10 addressed whether an organization that is not a party to a class action suit may provide funds to help defray the suit's litigation expenses, where the organization does not share in any proceeds. The committee answered yes, provided that any funds solicited by attorneys involved in the suit will not be used to compensate those attorneys.

The committee relied on ABA Informal Opinion 1326 (1975), which held that while it is ethically proper to solicit funds for class action litigation expenses, such solicitation from nonparties would be improper if used as compensation for the attorneys representing the class (citing also ABA Informal Opinion 1283). It noted several supporting Supreme Court Rules: SCR 20.09(1) prohibits a lawyer from recommending self-employment to one who has not sought the lawyer's advice, and SCR 20.23(4)(c) directs a lawyer to avoid influence by third parties who may be more concerned with establishing or extending legal principles than with the immediate protection of the individual client's rights (citing also SCR 20.23, 20.24, 20.30(1)(b)). Because the nonparty organization here would fund only litigation expenses, with no part used to compensate the attorneys, the committee concluded the contributions would be proper, provided that institution of the class action is fully consistent with the rights and interests of the named parties (SCR 20.23(4)(c), 20.24(1), and 20.35).

Currency note

This opinion was issued in 1983, before Wisconsin's July 1, 2007 adoption of the revised Rules of Professional Conduct for Attorneys (the state's Ethics 2000 update), and it applies the former Code (SCR 20.09, 20.23, 20.24, 20.35). Third-party payment of a lawyer's fees or expenses is now addressed by SCR 20:1.8(f) / Model Rule 1.8(f), with the professional-independence rule in SCR 20:5.4(c) / Model Rule 5.4(c). Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, deadline, or requirement mentioned here.

Common questions

Q: Could a nonparty organization pay a class action's litigation expenses?

A: Yes, under E-83-10, so long as none of the contributed funds were used to compensate the attorneys representing the class and the action was consistent with the named parties' interests.

Q: What was the line the committee drew?

A: Funding expenses was proper; using nonparty contributions to compensate class counsel was not, following ABA Informal Opinion 1326.

Q: What protected the clients in this arrangement?

A: Per the opinion, the lawyer had to avoid third-party influence (SCR 20.23(4)(c)) and ensure the class action was fully consistent with the rights and interests of the named parties.

Background and rules framework

The opinion interpreted the former Code's provisions on recommending employment (SCR 20.09(1)) and avoiding third-party influence on the lawyer's independent judgment (SCR 20.23(4)(c), 20.24, 20.35), drawing on ABA Informal Opinions 1326 and 1283. Third-party payment and professional independence are now addressed by SCR 20:1.8(f) and 20:5.4(c) / Model Rules 1.8(f) and 5.4(c).

Citations and references

Rules of Professional Conduct:

  • Wis. SCR 20.09(1) / Model Rule 7.3 (recommending employment to one who has not sought advice) (former Code provision)
  • Wis. SCR 20.23(4)(c), 20.24(1), 20.35 / Model Rules 1.8(f), 5.4(c) (avoiding third-party influence on the lawyer's judgment) (former Code provisions)

Other opinions cited:

  • ABA Informal Opinion 1326 (1975): soliciting funds for class action expenses proper, but not as attorney compensation
  • ABA Informal Opinion 1283 (1973): related solicitation guidance

See also

Source

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