As finance companies that make loans to plaintiffs grow in power and reach, lawyers should advise their clients on the risks involved with borrowing, the ethics committee of the New York City bar association says in a new opinion.

“This is a kind of stop, look, and investigate directive,” Seth Schwartz, chairman of the bar’s ethics committee, told iWatch News. “Don’t assume that the borrowing is some kind of routine thing – check it out.”

The opinion, which is likely to influence how other legal professional organizations answer ethical questions about betting on lawsuits, also requires lawyers to check with clients before disclosing confidential information to lenders. But it doesn’t stop attorneys from accepting referral fees from lenders, even though Schwartz said in an interview that it would be hard for a lawyer who did so to “maintain objectivity.”

The opinion comes several months after an investigation by iWatch News and the New York Times that found that lawsuit funders charge interest rates that often exceed 100 percent to people who need help making ends meet while they await the resolution of a personal injury lawsuit.

The high cost of borrowing means that many plaintiffs owe three or four times what they initially borrowed to the finance company. In some instances, plaintiffs have owed the lender their entire recovery.

The companies say they must charge high prices because betting on lawsuits is very risky. They say that the money they lend is not a loan, and thus not subject to laws in many states that forbid high-cost lending, because the money doesn’t have to be paid back if the client loses the case.