{"id":4029,"date":"2025-02-05T03:56:47","date_gmt":"2025-02-05T03:56:47","guid":{"rendered":"https:\/\/usatrustedlawyers.com\/blog\/2-law-firms-disqualified-over-litigation-funding\/"},"modified":"2025-02-05T03:56:47","modified_gmt":"2025-02-05T03:56:47","slug":"2-law-firms-disqualified-over-litigation-funding","status":"publish","type":"post","link":"https:\/\/usatrustedlawyers.com\/blog\/2-law-firms-disqualified-over-litigation-funding\/","title":{"rendered":"2 Law Firms Disqualified Over Litigation Funding"},"content":{"rendered":"\n
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Two law firms have been disqualified from representing the defendants in a New Jersey patent dispute because they were getting funding from a nonparty. <\/p>\n<\/div>\n

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The ruling serves as a reminder of the ethical questions that can arise when litigants accept funds from nonparties who are willing to pay the bills. <\/p>\n<\/div>\n

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U.S. Magistrate Judge Andre M. Espinosa of the District of New Jersey, in Harish v, Arbit<\/i>, ruled that Saiber of Florham Park, New Jersey, and Banner Witcoff of Chicago could not continue representing two inventors, because the lawyers were being funded by a nonparty producer of medical test equipment\u2014Lincoln Diagnostics of Decatur, Illinois\u2014which had an interest in the outcome. <\/p>\n<\/div>\n

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Don’t ‘Touch the Steering Wheel’<\/h2>\n<\/p>\n

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The case involves three people who were listed on the patent in 2018 as inventors of a device for conducting allergy skin tests without the discomfort from traditional methods using multiple injections. <\/p>\n<\/div>\n

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Ziv Harish, a physician in Maine, was listed on the patent along with technology executive Isaac Rubenstein and physician Ehud Arbit, who are both from New Jersey. In 2020, Arbit and Rubenstein sold their shares in the patent to Lincoln in exchange for compensation, the complaint alleges. <\/p>\n<\/div>\n

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In 2021, Harish sued Arbit and Rubenstein, claiming he is the only inventor of the device and seeking to remove the others’ names from the patent, according to the complaint. Later, Harish moved to disqualify Saiber and Banner Witcoff from representing Arbit and Rubinstein, alleging that their bills are being paid by Lincoln. Espinosa granted the motion on Jan. 31. <\/p>\n<\/div>\n

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“New Jersey RPC 1.8(f) outlines the circumstances where a lawyer can accept money on behalf of a client from a third party,” said Noam J. Kritzer of Kritzer McPhee in Florham Park, New Jersey, who represents Harish. “If litigation is like driving a car, third-party funders are allowed to pay for gas but are not allowed to program the GPS or touch the steering wheel. Here, the attorneys at Banner Witcoff were serving Lincoln’s interests instead of defendants’ interests and the order explains in great detail the ethical violations the attorneys committed under NJ RPC 1.8(f).” <\/p>\n<\/div>\n

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Failed Test<\/h2>\n<\/p>\n

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The order disqualified Marc Cooperman, Brian Apel, Jake Earl and Erik Maurer, all of Banner Witcoff, and Katherine Escanlar of Saiber. They did not respond to requests for comment about the ruling. <\/p>\n<\/div>\n

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Harish argued in a motion to disqualify defense counsel that the motion should be granted because the defendants could not meet conditions articulated by the New Jersey Supreme Court in a 2009 ruling, In re State Grand Jury Investigation. <\/i><\/p>\n<\/div>\n

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Espinosa, applying the 2009 decision, found that the arrangement between Lincoln and the defendants failed five parts of the six-part test from Grand Jury<\/i>. <\/p>\n<\/div>\n

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The parties to the payment arrangement could not demonstrate that the client gave informed consent; and they failed to demonstrate that there was no interference with the lawyer’s independence of professional judgment or with the lawyer-client relationship, Espinosa wrote. <\/p>\n<\/div>\n

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“Defendants present their respective declarations as evidence that the fee arrangement here has not interfered with their lawyers\u2019 independent judgment. But this does not establish that Lincoln has not directed, regulated, or interfered with defense counsel\u2019s professional judgment. The record makes clear that Lincoln is directing, regulating, and interfering with defense counsel\u2019s professional judgment in its representation of defendants, and thus, the second Grand Jury<\/i> condition is not satisfied,” Espinosa wrote. <\/p>\n<\/div>\n

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Also, the parties failed to demonstrate there was no communication between the lawyer and the third-party payer concerning the substance of representation of the client, and that once the third-party payer commits to pay for the representation of another, the third-party payer shall not be relieved of its continual obligations to pay without leave of court brought on prior notice to the lawyer and the client. <\/p>\n<\/div>\n

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“Defendants present their respective declarations as evidence that the fee arrangement here has not interfered with their lawyers\u2019 independent judgment. But this does not establish that Lincoln has not directed, regulated, or interfered with defense counsel\u2019s professional judgment,” Espinosa wrote. “The record makes clear that Lincoln is directing, regulating, and interfering with defense counsel\u2019s professional judgment in its representation of defendants, and thus, the second Grand Jury<\/i> condition is not satisfied.” <\/p>\n<\/div>\n

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