When a Hawaii plaintiff needs financial help during a case, the funding decision should be reviewed as carefully as any other arrangement affecting the client’s interests. Attorneys should separate verified Hawaii law from prudent practice, then examine the agreement, communications, confidentiality, conflicts, settlement control, and repayment terms before a client signs.

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The practical starting point is identifying which rules apply to the specific case and agreement, and which safeguards help protect the client’s decision-making. That distinction makes the attorney’s initial review more focused and more useful.

What Hawaii Litigation Funding Regulations Require Attorneys to Check First

The first question is not simply whether a funding agreement is labeled a lawsuit advance. Attorneys should identify which legal framework actually applies to the proposed arrangement. That review may involve Hawaii statutes, court orders, the written contract, and professional-conduct duties, each addressing a different risk.

1. Is there a statute that directly governs the arrangement?

Do not assume that Hawaii has a single, comprehensive litigation-funding statute, a statewide funding-rate cap, or a universal disclosure mandate. Those conclusions require current authority specific to the transaction. Hawaii does have statutes addressing interest and usury, including written contract rates, compound interest, and exemptions. The statutory chapter itself lists those subjects, but its presence does not answer every question about a particular litigation-funding agreement. Attorneys should review the current text of Hawaii’s interest and usury provisions with counsel familiar with the arrangement.

2. Could consumer-protection law apply?

Hawaii Revised Statutes section 480-2 makes unfair methods of competition and unfair or deceptive acts or practices in trade or commerce unlawful. The statute also directs courts and the Office of Consumer Protection to consider relevant Federal Trade Commission interpretations. That does not automatically make funding unlawful, but it makes accurate, understandable representations and transparent contract terms important areas for review. See the official Hawaii consumer-protection statute.

3. What do the court and the contract require?

A judge may impose case-specific orders involving confidentiality, discovery, settlement approval, or distribution of proceeds. Separately, the agreement should clearly state the advance, repayment calculation, interest method, fees, confidentiality terms, and what happens if the case is lost or ends without a recovery. Those contract questions are not the same as a statewide disclosure rule.

4. What professional duties affect the review?

Hawaii’s ethics rules require lawyers to consult with clients about the means used to accomplish their objectives and explain matters well enough for informed decisions. They also protect confidential information. Hawaii Disciplinary Board Formal Opinion No. 34 addresses attorney involvement in financing and emphasizes non-usurious charges, informed clients, disclosure of any attorney financial interest, and considering independent counsel when appropriate. Attorneys should therefore separate a neutral referral from substantial assistance and document the client’s understanding.

This section is general legal information, not legal advice. Hawaii attorneys should verify current law, court orders, and professional obligations before recommending or facilitating funding for a specific client.

Which Hawaii Professional Conduct Rules Matter in a Funding Review?

A funding review is also a professional-responsibility review. The Hawaii Rules of Professional Conduct do not turn every funding discussion into a conflict. But they do require attention to client authority, communication, confidentiality, financial interests, and the lawyer’s independent judgment. The current official text should control any case-specific analysis.

Client consultation and informed decisions

Rule 1.2(c) permits a lawyer to limit the scope of representation when the limitation is reasonable and the client gives consent after consultation. In a funding context, the attorney should be clear about what the firm will and will not do. This avoids allowing a funder or financing discussion to blur the client’s authority over the representation. Read Hawaii Rule 1.2(c).

Rule 1.4 requires reasonable consultation about the means used to accomplish the client’s objectives. It also requires the lawyer to explain a matter enough for the client to make informed decisions. A useful review should therefore address the proposed advance, repayment terms, possible effects on the client’s recovery, alternatives, and any practical consequences before the client decides. The rule also calls for prompt notice when a client’s consent after consultation is required. Review Hawaii Rule 1.4.

Confidentiality and information sharing

Rule 1.6 generally prohibits revealing confidential information relating to the representation unless the client consents after consultation. Disclosure is impliedly authorized to carry out the representation, or an exception applies. A lawyer considering a funder’s request for case information should identify what would be shared, why it is needed, who will receive it, and whether client authorization is required. Do not assume that a funding application permits unrestricted disclosure of the file. See Hawaii Rule 1.6.

Conflicts and prohibited transactions

Rules 1.7 and 1.8 warrant a separate conflict check. The attorney should ask whether the lawyer or firm has a financial interest in the funding source, will receive a benefit from the arrangement, or could be pulled between the client’s interests and another person’s interests. The official rules should be read in full before a lawyer recommends, negotiates, or participates in a transaction involving the client. Review Hawaii Rules 1.7 and 1.8.

Fees, independent counsel, and practical safeguards

Rule 1.5(b) addresses written communication of the representation’s scope and the basis or rate of fees and expenses for which the client is responsible. Hawaii Formal Opinion No. 34 also distinguishes a bare referral from substantial assistance in arranging financing. Where an attorney or firm has a financial interest or may gain financially, the client should be told before applying. The opinion recommends suggesting independent counsel to assess the fairness of financing terms in appropriate circumstances. Read Hawaii Formal Opinion No. 34.

This is general legal information, not individualized legal advice. Attorneys should review the current rules, the complete agreement, and the facts of the particular representation before advising a client.

How Should Attorneys Review a Hawaii Funding Agreement?

A careful review helps the attorney and client understand the arrangement before any advance is accepted. The checklist below reflects prudent practice and client-centered review. It is not a statement that Hawaii imposes each item as a separate funding-agreement mandate. Attorneys should confirm the current law and professional-conduct requirements that apply to the specific matter.

1. Identify every party and each party’s role. Confirm the plaintiff, funding organization, law firm, and any servicing or payment party named in the agreement. Check who may communicate about the case and make clear that the funder does not control litigation strategy, settlement decisions, or the attorney-client relationship.
2. Trace the advance and repayment waterfall. Record the amount the client receives, when it is funded, what event triggers repayment, and how any settlement proceeds will be distributed. The agreement should explain whether repayment comes from the recovery and how attorney fees, case costs, liens, and the client’s net share are handled.
3. Calculate interest using the actual terms. Make sure the client can see the rate, accrual period, and payoff examples. The Milestone Foundation describes pre-settlement funding at 15% simple annual interest and post-settlement funding at 10% simple interest. Simple interest does not compound, so interest should not be added to principal to generate additional interest.
4. Look for every fee and adjustment. Ask whether there are application, origination, servicing, wire, late, renewal, or other charges. A transparent agreement should disclose the total cost clearly. The Foundation states that it has no hidden fees.
5. Confirm the non-recourse protection. The agreement should say what happens if the case is lost or produces no recovery. Non-recourse funding means the plaintiff owes nothing if the case does not succeed, subject to the exact written terms.
6. Review confidentiality and conflicts. Determine what case information will be shared, obtain appropriate client authorization, and consider whether the firm or attorney has any financial interest in the funding arrangement. Hawaii Formal Opinion No. 34 addresses financing assistance, client information, disclosure of financial interests, and informed terms. Attorneys should also consider whether independent advice is appropriate.
7. Test client comprehension and participation. Explain material advantages, disadvantages, alternatives, and the effect on the client’s eventual recovery. Attorney participation is required for the Foundation’s plaintiff funding applications. For more background, review this guide to attorney review of funding terms. The client should decide freely, without pressure to borrow or settle.

Keep the signed agreement, calculations, disclosures, and client communications with the matter file. When a term is unclear or unusually restrictive, pause and obtain clarification before the client proceeds.

Does Hawaii Require Disclosure of Litigation Funding?

Hawaii litigation funding regulations do not appear to establish a blanket statewide rule requiring every plaintiff to disclose funding in every case. That does not mean disclosure is never required. The answer can depend on the funding arrangement, the attorney’s role, the claims and information involved, and the rules or orders governing the particular court and case.

Hawaii’s professional-conduct framework supports careful client communication. Rule 1.4 requires lawyers to consult with clients about the means used to accomplish their objectives and to explain matters sufficiently for informed decisions. Rule 1.6 generally protects confidential information. If an attorney helps arrange financing beyond a simple referral, Hawaii Disciplinary Board Formal Opinion No. 34 addresses conditions including informing the client of the credit terms and disclosing any financial interest the attorney or firm has in the lender. See the Hawaii Rules of Professional Conduct and Formal Opinion No. 34.

Those ethics and client-consent duties are different from a statewide litigation-funding disclosure mandate. A judge may address funding through discovery, a protective order, a case-management order, or a specific dispute about relevance, privilege, control of litigation, or settlement distribution. Counsel should not assume that an opposing party is entitled to the agreement, or that the agreement is automatically protected. The current court rules, the assigned judge’s orders, and the case posture should control the analysis.

Practical disclosure checklist

• Review the current Hawaii rules, local rules, scheduling orders, and any discovery requests.
• Identify whether the agreement contains confidential client information or communications that require protection.
• Check for attorney or firm financial interests, referral compensation, or other conflicts, and disclose them where required.
• Explain the material terms to the client, including repayment obligations, control of the case, settlement handling, and any limits on confidentiality.
• If disclosure is requested, consider relevance, privilege, confidentiality, and whether a protective order is appropriate before producing documents.

This is general legal information, not individualized legal advice. Attorneys should verify the current authority and seek guidance on the specific court and case before deciding whether, when, and how to disclose funding.

How Can Funding Protect Client Choice Without Influencing Litigation?

Responsible funding should give a client more room to make a considered decision, not create a new voice in the case. Financial hardship can narrow a plaintiff’s practical choices, including whether to wait for a fair resolution or accept an offer simply because immediate expenses have become unmanageable. A funding arrangement can help address that pressure while leaving litigation strategy and settlement decisions with the client and attorney.

Attorney independence is central. The funder should not direct pleadings, discovery, negotiations, trial strategy, or settlement authority. The attorney remains responsible for legal advice, while the client decides whether to pursue funding after understanding the costs, risks, and alternatives. Hawaii’s professional-conduct rules call for reasonable consultation about the means used to accomplish a client’s objectives and explanations sufficient to support informed decisions. See Hawaii’s current Rules of Professional Conduct.

That process works best when the client is never treated as a sales target. An attorney can explain that funding is optional, discuss potential benefits and drawbacks, and make clear that declining an advance will not affect the quality of representation. The client should also understand the repayment terms, how a recovery may be distributed, and whether the agreement creates any obligations if the case is unsuccessful. Attorney participation and case verification can support clarity without giving the funder control over the representation.

The Milestone Foundation describes itself as the United States’ first and only 501(c)(3) nonprofit consumer litigation funding organization. Its mission-driven model is designed to promote fairness, transparency, and access to justice rather than pressure plaintiffs to borrow or settle. Its funding is non-recourse, meaning a plaintiff does not owe repayment if the case is lost, subject to the agreement’s terms. The organization also states that its interest does not compound. These features should still be reviewed carefully by the client and attorney before any decision.

For attorneys evaluating whether a funding relationship fits their professional responsibilities, review the Foundation’s ethical funding options for attorneys. This article provides general legal information, not individualized legal advice. Hawaii counsel should assess the current rules, the specific agreement, and the client’s circumstances before recommending or facilitating funding.

What Fair Funding Terms Should Hawaii Plaintiffs Understand?

For Hawaii plaintiffs and their attorneys, a fair funding review starts with the written agreement, not a sales pitch. The terms should make the total repayment obligation understandable and preserve the client’s ability to make informed decisions. Attorney participation is required for The Milestone Foundation’s plaintiff funding applications, including case verification and attorney approval or acknowledgment.

Questions to ask when reviewing litigation funding terms

Term	What it means	Question to ask
Pre-settlement interest	Pre-settlement funding uses 15% simple annual interest. The balance does not grow through interest-on-interest.	Can the agreement show the expected repayment at different settlement dates?
Post-settlement interest	Post-settlement funding uses 10% simple interest. Confirm how the agreement applies the rate to the advance.	Is the rate and calculation explained in plain language?
Simple interest	Interest never compounds. Unpaid interest is not repeatedly added to the principal to create a larger interest base.	Does the contract expressly state that interest never compounds?
Non-recourse funding	If the plaintiff loses the case, the plaintiff owes nothing under a genuinely non-recourse arrangement.	Are there any circumstances that could create personal repayment liability?
Fees and transparency	There should be no hidden fees. Every charge, repayment trigger, and distribution step should appear in the agreement.	Are administrative, transaction, or early-repayment fees disclosed?
Attorney participation	The attorney helps verify the case and should review how funding could affect the client’s choices and settlement distribution.	Has the client received enough information to decide freely?
No pressure to borrow	Funding should address a client’s needs without encouraging unnecessary borrowing or influencing litigation strategy.	Can the client decline, wait, or seek independent advice without pressure?

These terms are practical review points, not individualized legal advice. Attorneys should consider current Hawaii authority, the client’s circumstances, confidentiality, conflicts, and the agreement’s repayment waterfall before a client signs. The Milestone Foundation describes itself as the United States’ first and only 501(c)(3) nonprofit consumer litigation funding organization, offering a mission-driven alternative to typical for-profit funders.

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Frequently Asked Questions About Hawaii Litigation Funding Regulations

Does Hawaii have a specific statute governing every litigation funding agreement?

Do not assume that one statute answers every funding question. Review the agreement under current Hawaii law, including applicable interest and usury provisions, consumer-protection rules, court requirements, and professional-conduct obligations. The Hawaii statutes include provisions addressing contract rates, compound interest, and usury, so counsel should evaluate the actual terms rather than rely on a general label. See Hawaii’s interest and usury statutes.

What should a Hawaii attorney explain before a client accepts funding?

Explain the amount advanced, every repayment term, interest calculation, fees, what happens after a loss, settlement-distribution procedures, confidentiality issues, and alternatives. Hawaii Rule 1.4 requires reasonable consultation about the means used to accomplish the client’s objectives and an explanation sufficient for informed decisions. Review Hawaii Rule 1.4.

Does an attorney need to disclose a financial relationship with a funder?

Yes, if the attorney or firm has a financial interest in the lender or will gain financially from the arrangement, Hawaii Disciplinary Board Formal Opinion No. 34 says that fact should be disclosed before the client applies. The opinion also addresses fully informing the client about the credit terms and suggesting independent counsel when appropriate. Read Formal Opinion No. 34.

Can a client use non-recourse funding for living expenses?

Potentially, depending on eligibility, the case, and the agreement. Non-recourse means the plaintiff generally owes nothing if the case is lost. But the client and attorney should still review the repayment waterfall, simple-interest calculation, fees, and any settlement obligations before signing. Funding should support informed client choice, not pressure a plaintiff to borrow or settle.

Talk With Your Attorney About Funding Options

Funding decisions should be made with a clear view of the case, the agreement, and the effect on any eventual recovery. A Hawaii plaintiff should discuss eligibility, repayment, timing, and alternatives with counsel before signing. The attorney can also help confirm that any information shared with a funder is handled appropriately and that the arrangement does not interfere with the client’s objectives.

The Milestone Foundation is the United States’ first and only 501(c)(3) nonprofit consumer litigation funding organization. Its stated model uses simple interest, non-recourse terms, and no hidden fees, while attorney participation remains part of the application process. These terms are information to review, not a recommendation that every plaintiff borrow.

Learn about fair funding options and discuss them with your attorney.