USA (New York)
With the increasing frequency of cyberattacks and the evolving landscape of data privacy laws, litigation related to cybersecurity breaches and data protection is expected to rise. Alongside this, the rapid development and deployment of AI technologies, including generative AI tools, are creating new legal challenges. Intellectual property (IP) disputes and regulatory actions concerning AI are anticipated to increase as legal frameworks struggle to keep pace with technological advancements.
Class actions and regulatory investigations related to securities and financial fraud are likely to remain prominent with litigation from misrepresentations, insider trading, and other fraudulent activities in the financial sector anticipated.
Government agencies are expected to maintain a strong focus on regulatory enforcement, particularly in areas such as healthcare, financial services, and technology.
1. Is third party funding permissible for disputes?
Yes, in New York, third-party litigation funding is permitted, subject to a few caveats. While it is still a relatively new concept in the United States compared with, for example, the United Kingdom, more and more claimants and their counsel are considering third-party litigation funding.
There are no explicit limits on the fees and interest that a funder can charge. NY Banking Law section 14-a provides that interest on a loan cannot exceed 16 per cent. The permissible interest rate can go up to 25 per cent if the loan value is from US$250,000 to US$2.5 million, without any limit for loans in excess of US$2.5 million.
However, since third-party litigation funding is generally provided on a non-recourse basis, the funding is treated as a purchase or assignment of the anticipated proceeds of the lawsuit, and therefore not subject to the usury statute, which limits interest rates that a person can charge.
2. Are lawyers able to work on a contingent basis in the jurisdiction and are there any restrictions?
Yes, lawyers in New York are able to work on a contingent basis, particularly in personal injury cases.
The contingency fee allowed in a personal injury case varies from state to state, but in New York, it’s at most 33.33%. The exact fee will depend on the anticipated complexity of your case as well as on the experience and expertise of your attorney.
3. Can the court or tribunal order one party to pay the other’s legal costs?
In New York, as in many jurisdictions, the court has the authority to award legal costs to one party against another. This is commonly referred to as an award of “attorneys’ fees” or “legal fees.” However, the circumstances under which such awards are made can vary, and it often depends on the specific statutes, rules, or contractual agreements involved in the case.
Here are some common scenarios in which a court in New York might order one party to pay the legal costs of another:
- Statutory authority: Some statutes or laws provide for the award of attorneys’ fees to the prevailing party. For example, certain consumer protection laws or civil rights statutes may include provisions allowing for the recovery of legal fees.
- Contractual agreements: If there is a contract between the parties that includes a provision for the payment of legal fees in the event of a dispute or litigation, the court may enforce such contractual agreements.
- Frivolous conduct: In certain situations, if one party engages in frivolous or unreasonable conduct during the litigation, the court may order that party to pay the legal costs of the other party.
4. Is insurance available to protect against adverse outcomes for funded litigation?
Yes, insurance is available to protect against adverse outcomes for funded litigation in New York. In the United States, and specifically in New York, the losing party does not generally pay the attorneys’ fees of the prevailing party except in specific types of cases, or where otherwise required by a contract between the parties.
In addition, a court has the discretion to order the unsuccessful party (or its attorney) to pay to the prevailing party its attorneys’ fees or other financial sanctions, if the unsuccessful party engaged in frivolous conduct in connection with the litigation.
After The Event (ATE) insurance is not commonly used in New York, but there is no statute that prohibits it. Insurance in New York is a heavily regulated field, with licensing and other rules that may affect who can issue or purchase ATE insurance.
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