Colorado Pushing Back on Firms’ Fee-Sharing: Litigation Finance

Colorado lawmakers passed a bill this week that targets alternative business structures. The bill prohibits a lawyer or law firm from sharing legal fees with a non-lawyer, and from entering into a contractual agreement with an alternative business structure.

Legislators in states that don’t allow non-lawyer ownership of law firms are increasingly taking umbrage with those firms crossing state lines through co-counseling agreements. These bills are a way of cracking down on the issue. We’ll see if other states join the fray.

The bill is now awaiting signature from Gov. Jared Polis.

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Litigation Finance Assets Slump

Litigation finance is also attracting hedge funds and other alternative asset managers looking to invest in legal claims at distressed valuations, William Shaw, Edward Clark and Gautam Naik report. Davidson Kempner Capital Management and Attestor are looking to buy up assets at valuations as low as 10 cents on the dollar.

Lengthy court cases are upending the financial logic of some seemingly solid bets.

What I’m Reading (and Listening to)

• Litigation funders expressed disappointment at the UK government’s failure to include reform of the funding regime in its legislative program, according to The Global Legal Post. Funders hoped the government would deliver on its pledge to reverse the 2023 Supreme Court PACCAR decision, which rendered litigation funding agreements unenforceable because they were damages-based agreements.
• Semafor interviewed Burford CEO Chris Bogart on its Compound Interest podcast, where he discussed investing in law firms and the YPF ruling.

Business & Practice

John Quinn Says Timing of His Firm Leadership Exit Is ‘Logical’

John Quinn has been celebrating the 40th anniversary of the law firm he founded by expounding on what he has learned running it all these years. Sunday, he seemed to give one more lesson: Don’t be sentimental about your exit.

Anthropic Pushes Deeper Into Legal Work With Claude Updates

Anthropic PBC is angling to be a major direct provider of legal technology with its latest rollout of legal tools, extending beyond its original role as a maker of frontier large language models.

Risky Cases Lead to Top-Dollar Work for New York Boutique

Leaders of litigation boutique Hecker Fink said its years of taking on matters opposite the government, including the Trump administration, have been worth the risk.

Columnist Corner

Cost savings isn’t the only—or even the main—reason that clients ask to see law firms’ artificial intelligence use in their billing statements, Good Counsel columnist Eric Greenberg writes.

Explaining AI use in billing provides a narrative about how AI is enriching legal work—"not to just do deposition summaries faster, but to surface new arguments or frameworks for persuasion,” Eric says.

And transparency is good for firms, too. The data collected can show which practice groups are finding new applications for programs, which lawyers are using AI effectively, and where there are gaps between what’s available and what’s being deployed, he says.

Commentary & Opinion

Prediction Markets Can’t Go on Without Legal Enforcement in Place

Online prediction markets have exponentially increased the risks of government insider trading and corruption, leaving states and the federal government scrambling to stop it. The danger to public trust and national security could be devastating, and yet there are limited mechanisms to prevent insider trading on prediction markets, write Holtzman Vogel’s Mark Pinkert, Akiva Shapiro, and Brandon Smith.