Payment of Expenses in Securities Class Actions: Ethical Dilemmas, Class Counsel, and Congressional Intent

Abstract

This paper considers the law and economics of legal ethics rules in certain states that purport to prohibit an attorney from advancing costs and expenses of litigation with repayment by the client contingent on success of the case. The paper argues that these rules, to the extent they are otherwise effective, should not be enforced in the context of private securities litigation brought under the Private Securities Litigation Reform Act of 1995.

Keywords: litigation, expenses, ethics, class actions

JEL Classification: K41