Creatively finance legal matters with crowdfunding

Crowdfunding has become commonplace in our society. With websites like Patreon, artists have generated income streams that get monthly support from those willing to donate. While many areas are benefiting or even evolving from crowdfunding, the legal industry seems to have a blind spot when it comes to the tool.

Crowdfunding of legal issues is not unknown. However, its immense potential is far from being fully realized.

That said, the methods of fundraising for legal matters raise both legal and ethical concerns that other industries need not be concerned with.

However, this should not deter law firms or clients from use crowdfunding as a tool. The same ethical rules that govern other legal fundraising methods already provide a roadmap for how to deal with potential problems.

Fundamentals of crowdfunding

Crowdfunding is a relatively new buzzword for a practice that goes back about as far as business itself. The interconnectivity offered by the Internet has just given it a facelift in the 21st century.

The crowdfunding process requires three components: someone to create a project they wish to fund, people willing to support the project, and a platform that organizes information and facilitates communication and transaction between the two.

Legal Complexes

The tech field has had incredible success in funding projects using crowdfunding. A smartwatch company was able to lift around $ 9 million with the end product as an incentive to potential funders.

However, state and national bar associations and attorney regulatory authorities have rules governing how attorneys’ fees can be billed and paid. What they don’t have are specific prohibitions for lawyers from collecting attorney fees through crowdfunding.

This means that as long as it does not violate any of the existing ethical rules governing lawyers’ fees or representation, crowdfunding is as viable a fundraising tool for a legal matter as any of the traditional methods.

Tell a good story

Outside of campaigns that showcase an amazing product, the most successful crowdfunding results come from campaigns that tell compelling stories.

The legal field is all about telling compelling stories. Legal matters usually have ramifications beyond the people directly involved in them. Finding a way to capture the public interest is a proven method of gaining moral support. Now it can also be used to get financial support.

Obviously, this approach is better suited to some areas of practice than others. Yet very few problems are truly unique to one person. If the customer is sympathetic, let them tell the story. If the problem itself is relatable, position your campaign as a fight against the good fight now, before it becomes everyone’s problem.

Social media will be of great help in this area. Pew Research Center estimates that 62% of adults use social media as a source of information (for better or for worse). If you can break the News masses, you’ve opened yourself up to eyes you never thought you’d ask. It’s no secret that’s why most crowdfunding platforms interface so easily with social media sites.

Access to representation

Money is probably the most prohibitive aspect of widespread access to effective legal representation around the world, but especially in the United States. Since crowdfunding has increased the access of the general public to the tech and entertainment industry, there is no reason that it cannot improve the general public in the same way. access to justice as well as.

Loans are the way businesses have traditionally funded businesses and projects that they are passionate about, but lack the independent funding to pursue. Some clients even turn to the offer of participation in their complaints as a method of solicitation. litigation financing.

the legal sector is ready for a better fundraising method for law firms and potential clients.

Crowdfunding can provide this access without placing the financial burden of funding a project or issue on the shoulders of a few. By dividing up financial responsibilities, clients who would otherwise have seek justice and lawyers have more leeway to deal with issues they deem important to represent the client.

Ethical concerns

As mentioned above, the rules are a bit different when it comes to fundraising for a legal matter. Some of the changes are minor, but some of them are more profound.

For example, a crowdfunding project for a legal case should have a Warning this clearly shows that the aid would not give right to any compensation despite the fact that law firms are for-profit entities.

Adding a disclaimer is pretty straightforward. What might be difficult is navigating the intricacies of privacy and disclosure when trying to solicit support on social media.

The client may not want their personal business to appear on the Internet, regardless of their benefit. If so, as a lawyer you are ethically bound to respect those wishes.

Removing the social media aspect of crowdfunding to maintain privacy makes most of the more popular crowdfunding sites more or less useless for your causes. This is the ABA model Rule 1.6 which specifically requires informed consent on the disclosure of customer information. You can try to advocate with your client, but if they don’t budge, you will need to rethink your strategy.

With respect to third party funding arrangements, there are additional concerns that must also be addressed. Model ABA Rule 5.4 specifically prohibits lawyers from sharing legal fees with non-lawyers. Lawyers are not even allowed to form partnerships with non-lawyers if the basis of the partnership involves the practice of law.

This rule can make offering equity as an incentive for a crowdfunding campaign a non-starter in the overwhelming majority of the United States. The only place where this can be allowed is Washington DC, where non-lawyers are allowed to hold a stake in a law firm for the purpose of maintaining lobbying interests.

Another potential hurdle for crowdfunding legal issues comes in the form of raising too much money. Law firms are only allowed to charge one “Reasonable costs” for their services – as explicitly stated by model rule ABA 1.5. If the reasonable fee for a case is X and a crowdfunding campaign increases XYZ, it would be unethical for the law firm to keep the extra Ys and Zs.

Fortunately there is crowdfunding platforms designed specifically for crowdfunding legal issues. These platforms can either cap contributions at a certain rate or provide other avenues for any financial overruns.

This is done by keeping all donations in a trust which is dispersed at the conclusion of the case. This way, the appropriate amount can be used to settle legal fees and whatever remains can be distributed accordingly.


Crowdfunding offers a tool to pay for business or projects that would otherwise be overlooked.

For those with misgivings about ethical concerns, existing ethical rules are already clearing the way for maintaining compliance. As long as you make sure your crowdfunding initiative meets these guidelines, there is no reason not to take advantage of these fundraising platforms.

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About Rhonda Lee

Rhonda Lee

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