Tag Archives: alternative litigation finance

Understanding Alternative Litigation Financing (ALF)

Alternative litigation finance is an outside funder (third-party) providing either an attorney or client with funds to proceed with a claim.  However, these agreements can vary greatly among funders and even greatly among cases handled by one funder, making litigation finance a complex field to understand.

What kinds of claims can ALF be used for? Even just a few years ago, third-party litigation financing was seen as only an option for personal injury claims against insurance companies.  While this remains an important aspect of litigation finance to bring justice to these victims, it is not exclusive to what alternative litigation finance can be used for at all. Now we see more use of ALF in complex commercial litigation and other types of claims.

How does a funder decide what cases to fund and how much to fund? Part of the reason the agreements between funders and clients vary so much is based on the size and risk of the case.  A lot goes into analyzing what is a smart risk for a funder to take, what kinds of cases particular funders want to take on, and doing due diligence on a potential case. But there are also many rules that limit what some funders may and may not be able to do.  For example, restrictions on the funder-attorney relationship, meaning how much or how little the funder can be involved in the case. There are also limits on contingent fee charges and lawyers advancing cash, so that an attorney may not advance more than the court costs and expenses of litigation.

Where does the money come from? Litigation finance companies receive the money they provide to clients from investors.  Investors are continuing to invest more and more because as this field grows, the proof of success continues to grow.  Most recent data has shown that litigation finance is very profitable.  The largest litigation funding firm, Burford Capital has profits of $142 million in 2017, up $27 million from the previous year.  Data like this shows that litigation is proving to be an attractive investment for many people, with its investment timeline typically requiring only a three to five year investment.

Hopefully this serves to demystify a field that is rapidly growing and proving to be very successful in the legal industry.

Topics:  litigation finance, alternative litigation finance, third-party funding, legal system reform

 Works Cited: Matthew Bogdan, Note, The Decisionmaking Process of Funders, Attorneys, and Claimholders, 103 Geo. L.J. 197 (2014).  Kevin LaCroix, The Latest on Third-Party Litigation Financing, The D&P Diary (Jan. 15, 2018).

The Mechanics of Obtaining Alternative Litigation Funding

Plaintiffs and plaintiffs’ law firms are often unfamiliar with the process of obtaining alternative litigation funding (“ALF”).  Despite differences in applicable law in various jurisdictions, this process – and the agreements typically associated with obtaining ALF — have become increasingly standardized and widely accepted.  Established companies which provide ALF have experience with the issues involved in obtaining ALF and are able to guide potential clients through this process.

A litigation funding agreement (“FLA”) will typically be preceded by a due diligence period and which may include an exclusivity agreement. This process may be concluded in weeks or even days, depending on how well developed and how close to trial the case is.  A case which is still in the early stages will most likely take longer to assess and involve more risk.[i]

Funders typically ask for pleadings and/or a summary of the legal and factual arguments.  They may also ask for the key evidence that both supports and refutes the claims.  Funders also require a measurable theory of damages, even if it is preliminary.

Maintaining the attorney-client privilege and the protections provided by the work product doctrine are central to this process and beyond.[ii]  A non-disclosure agreement is typically executed at the outset of the due diligence period, and other precautions are taken to preserve the confidentiality of information.  Provisions designed to maintain these protections are incorporated into the final funding agreement.[iii]

If the parties reach a tentative agreement regarding the budget, the use of funds, the estimated duration, and other key terms, the funder will issue a term sheet and draft agreement.  The final agreement (which may contain ancillary agreements) will typically also address issues such as termination, priorities in distribution, maximum investment, verification, and notifications.

The American Legal Finance Association (“ALFA”) maintains a Code of Conduct for its members (which include TownCenter Partners, LLC).  ALFA’s Code of Conduct requires that its members comply with the laws, regulations and other rules of applicable jurisdictions, as well as adhere to the standards set forth in the Code.  ALFA has also developed standardized documentation for funding agreements for use by its members.[iv]

For further information, please feel free to contact Roni A. Elias, who leads the litigation finance team at TownCenter Partners, LLC, a boutique litigation funding company that funds plaintiffs and plaintiffs’ law firms nationwide.  TownCenter Partners, LLC is a litigation funder with a social mission and continues to level the playing field in litigation. Mr. Elias can be reached at roni@yourtcp.com or (703) 570-5264. © 2018 Roni A. Elias. All rights reserved.

Topics:  Litigation finance, litigation finance market, third-party funding, alternative litigation finance, litigation finance process, litigation finance agreements, due diligence, funding agreements.

[i] Mick Smith, “Mechanics of Third-Party Funding Agreements: A Funder’s Perspective” p. 28–35.

[ii] This issue is discussed in detail in other articles posted in this Blog.

[iii] Maya Steinitz, “A Model Litigation Contract, Litigation in Theory and Practice” (April 29, 2013), available at http://litigationfinancecontract.com/2013/04/.

[iv] https://americanlegalfin.com/

The Future of Litigation Financing

Alternative litigation financing (“ALF”) has seen dramatic growth in recent years, quadrupling between 2013 and 2016.[i]  Still, “the demand in the legal world is [] much higher than the supply of litigation finance”.[ii]

Several observers have noted that ALF will continue to expand in coming years, not only in volume, but into new areas.  One area set for expansion is the use of ALF by corporate law departments, where companies are increasingly interested in minimizing their litigation costs and risks.[iii]  ALF is also increasingly being used to fund an entire portfolio of cases, for many of the same reasons.

ALF is also being seen as a way to shift away from alternative fee arrangements, which currently may account for 80 or 90 percent of all revenues at many firms.[iv]  ALF provides a funding mechanism for relieving the pressures these fee arrangements place on both attorneys and clients.

Finally, the legal contexts in which ALF is utilized is expanding.  Historically used to fund plaintiffs’ personal injury cases, ALF continues to expand into the areas of appellate litigation, bankruptcy, tax matters, and private equity.[v]  It is also used during the enforcement stage of litigation.[vi]

In the appeals and enforcement context, ALF is recognized as a way to “hedge [against the] downside exposure [] and any further proceedings . . .  at a reasonable price [as well as] provide much needed liquidity” throughout resolution of legal matters.[vii]

For further information, please feel free to contact Roni A. Elias, who leads the litigation finance team at TownCenter Partners, LLC, a boutique litigation funding company that funds plaintiffs and plaintiffs’ law firms nationwide.  TownCenter Partners, LLC is a litigation funder with a social mission and continues to level the playing field in litigation. Mr. Elias can be reached at roni@yourtcp.com or (703) 570-5264. © 2018 Roni A. Elias. All rights reserved.

Topics:  Litigation finance, litigation finance market, third-party funding, alternative litigation finance, trends, enforcement, future, expansion, portfolio financing, bankruptcy, appeals.

[i] New York Law Journal, July 17, 2017, available at https://www.law.com/newyorklawjournal/almID/1202792922820/.

[ii] Mauritius Nagelmueller, “Recent Developments in Litigation Finance (Part 2 of 2)”, Litigation Finance Journal (December 11, 2017), available at https://litigationfinancejournal.com/recent-developments-litigation-finance-part-2-2/.

[iii] Bloomberg, “The Business of Litigation Finance is Booming” (May 30, 2017), available at https://www.bloomberg.com/news/articles/2017-05-30/the-business-of-litigation-finance-is-booming.

[iv] Thompson Reuters/Georgetown Law Center for the Study of the Legal Profession 2017 Report on the State of the Legal Market, available at https://static.legalsolutions.thomsonreuters.com/static/pdf/peer-monitor/S042201-Final.pdf.

[v] New York Law Journal, supra.

[vi] “Recent Developments in Litigation Finance (Part 2 of 2)”, supra.

[vii] Alison Frankel, “Litigation Funding in Bankruptcy ‘Should Be in Every Trustee’s Toolkit”, Reuters (March 14, 2017), available at https://www.reuters.com/article/us-otc-bankruptcy/litigation-funding-in-bankruptcy-should-be-in-every-trustees-toolkit-idUSKBN16L2HJ.

 

Court Rules Litigation Financing an Investment, Not a Loan

One of the current legal issues confronting the alternative litigation financing (“ALF”) industry is whether ALF qualifies as a loan – subject to statutes and regulations governing lending activities – or an investment.  Precedent is not uniform, but the most recent decision by the Georgia Court of Appeals in 2017 holds that ALF does not come within the state’s statutes governing loans.

In Cherokee Funding, LLC v. Ruth, 342 Ga. App. 404 (2017), the plaintiffs made separate litigation funding arrangements to receive several thousand dollars in exchange for agreeing to share any recovery they might receive in their lawsuits. When the plaintiffs settled their lawsuits, they claimed that the arrangements violated two state statutes regulating loans.  The court of appeals disagreed, holding that a loan was an agreement to advance money that required repayment.  Because the funding agreements at issue required repayment only if the plaintiffs achieved a recovery, the court concluded that the agreements were investment contracts that fell outside the scope of the statutes.

Cherokee Funding, LLC v. Ruth is pending before the Georgia Supreme Court. 

State courts are not uniform on this issue, however.  The Colorado Supreme Court in Oasis Legal Finance Group, LLC v Coffman, 361 P.3d 400 (Colo. 2015), held that that lawsuit funding agreements created loans that are subject to Colorado’s consumer finance statute.

Given the conflicting authority, careful attention should be paid to which jurisdiction’s law applies.  A choice of law provision in the funding agreement – an issue addressed in another blog on this site – is one potential method to address and resolve this issue.

For further information, please feel free to contact Roni A. Elias, who leads the litigation finance team at TownCenter Partners, LLC, a boutique litigation funding company that funds plaintiffs and plaintiffs’ law firms nationwide.  TownCenter Partners, LLC is a litigation funder with a social mission and continues to level the playing field in litigation. Mr. Elias can be reached at roni@yourtcp.com or (703) 570-5264. © 2018 Roni A. Elias. All rights reserved.

Topics:  Litigation finance, litigation finance market, third-party funding, alternative litigation finance, investment, loan, “Cherokee Funding”, “Oasis Legal Finance Group, LLC”.

States Increasingly Approve of Litigation Financing

Since its inception in the United States approximately twenty years ago, alternative litigation financing (“ALF”) has grown exponentially.  A 2017 survey found that nearly 30 percent of attorneys in private practice had used ALF compared to 7 percent a few years earlier. Michael F. Alyward, “Beyond Champerty: The Rise of Third Party Litigation Funding”, 2017 University of Michigan Law School Symposium (October 20, 2017).

Many jurisdictions initially sought to block or limit ALF, generally relying on common law doctrines such as barratry, champerty and maintenance. In recent years, many jurisdictions have rethought their resistance to ALF as its benefits have become widely acknowledged among practitioners and academics.

Massachusetts’s Supreme Judicial Court in 1997 declared that the doctrine of champerty would no longer be recognized.  Other states, including Arizona, California, Connecticut, New Jersey, New Hampshire, New Mexico, and Texas take the position that the doctrine of champerty was never adopted, and thus, it does not apply.   The Wall Street Journal noted in 2014 that the litigation funding “climate looks friend[ly] in Illinois,” and that restrictions on third-party litigation financing have been “relaxed or abolished” in a number of other states, including Texas, South Carolina, Massachusetts and Florida. Eighteen states explicitly permit champerty in some form.

It has been reported that Alabama, Colorado, Kentucky, and Pennsylvania are among the states that are most hostile to ALF. Litigation funding is restricted wholly or part in 20 states.  “Beyond Champerty”, supra.

Some states require particular disclosures in connection with ALF arrangements.  New York has not eliminated the doctrine of champerty in its entirety but encourages more disclosure.  The New York City Bar Association identified a number of elements of funding agreements which should be disclosed.  Similarly, Connecticut, New Jersey, Pennsylvania, Missouri, and Maryland require certain disclosures to funding clients pursuant to their state bar ethics committees. The American Bar Association also issued a cautiously favorable opinion regarding ALF subject to “full, candid disclosure of all of the associated risks and benefits”.  ABA Comm’n on Ethics 20/20, White Paper on Alternative Litigation Finance 17-40 (2011), http://www.americanbar.org/content/dam/aba/administrative/ethics_2020/20111019_draft_alf_white_paper_posting.pdf.

The doctrines of champerty, maintenance, and the like remain on the books in a majority of states, but those doctrines are not necessarily dispositive on the issue of ALF within those jurisdictions.  Massachusetts and Florida, for example, are among the thirty jurisdictions (twenty-nine states and the District of Columbia) that maintain prohibitions against both the assignment of personal injury claims as well as the assignment of the proceeds from any such claims. One commentator recently noted that “[t]oday, third-party funding is governed in the United States by a patchwork of relatively weak laws, cases, rules, and regulations—and they are only in force in a handful of states. The requirements of specific jurisdictions need to be closely examined, as this issue continues to evolve.

For further information, please feel free to contact Roni A. Elias, who leads the litigation finance team at TownCenter Partners, LLC, a boutique litigation funding company that funds plaintiffs and plaintiffs’ law firms nationwide.  TownCenter Partners, LLC is a litigation funder with a social mission and continues to level the playing field in litigation. Mr. Elias can be reached at roni@yourtcp.com or (703) 570-5264. © 2018 Roni A. Elias. All rights reserved.

Topics:  Litigation finance, state approval, trends, third-party funding, alternative litigation finance.

The Current State of ALF Regulation

The federal government does not regulate alternative litigation financing (“ALF”) at all, and only Maine (Maine Consumer Credit Code Legal Funding Practices, Me. Rev. Stat. tit. 9-A, §§12-101 to -107 (2012)), Ohio (Ohio Rev. Code Ann. § 1349.55 (West 2012)), Nebraska (Nonrecourse Civil Litigation Act, Neb. Rev. Stat. Ann. §§25-3301 to -3309 (West 2013)), have codified ALF regulation in their respective states.

The State of New York has a quasi-regulatory regime based on a 2005 agreement between the Attorney General of the State of New York and nine ALF companies regarding certain practices in the State.  (Bureau of Consumer Frauds and Protection, Attorney Gen. of the State of N.Y., Assurance of Discontinuance Pursuant to Executive Law § 63(15), pp. 4-7 (2005) available at http://www.americanlegalfin.com/alfasite2/documents/ALFAAgareementWithAttorneyGeneral.pdf. One New York court expressed its dismay at the Attorney General for giving ALF his “blessing.”  Echeverria v. Estate of Linder, No. 018666/2002, 2005 WL 1083704, at 8 (N.Y. Sup. Ct. Mar. 2, 2005) (“While the Attorney General seems to have given these types of funding institutions his blessing through signing an agreement with them, the Court feels that the effects of these types of institutions on the legal system and the judiciary need to be examined in further detail in order to determine whether this type of business practice is more of a benefit or detriment to society as a whole.”).

The New York City Bar Association (“NYCBA”) also released an opinion regarding ALF. This opinion reminds attorneys to be vigilant of the ethical pitfalls associated with this means of funding a lawsuit.  New York City Bar Association’s Committee on Professional Ethics Formal Opinion 2011-2.  The American Bar Association also addressed the ethical and legal issues regarding ALF.  Laurel S. Terry, “Globalization and the ABA Commission on Ethics 20/20: Reflections on Missed Opportunities and the Road Not Taken,” Hofstra Law Review: Vol. 43; Issue 1 (2014),
available at: https://scholarlycommons.law.hofstra.edu/hlr/vol43/iss1/3.

This area of the law continues to evolve rapidly, with proposals regarding a variety of aspects of ALF pending in a number of states and at the federal level.

For further information, please feel free to contact Roni A. Elias, who leads the litigation finance team at TownCenter Partners, LLC, a boutique litigation funding company that funds plaintiffs and plaintiffs’ law firms nationwide.  TownCenter Partners, LLC is a litigation funder with a social mission and continues to level the playing field in litigation. Mr. Elias can be reached at roni@yourtcp.com or (703) 570-5264. © 2018 Roni A. Elias. All rights reserved.

Topics:  Litigation finance, portfolio financing, portfolio funding, third-party funding, alternative litigation finance, state regulation, American Bar Association, New York.

ALF Increasingly Extends to Portfolio Financing

The emergence of “portfolio financing” is perhaps the defining recent trend in alternative litigation financing (“ALF”). Indeed, some litigation financing companies are now investing less than 15% of their litigation investment portfolios in single-case deals.

ALF historically was employed principally for class actions and individual personal injury cases. Today, commercial litigation is increasingly the focus of ALF.  Portfolio financing is a critical element of this evolution.

Portfolio financing allows attorneys – both individuals and firms – to take on large commercial disputes without unacceptable risk, and can be especially helpful to firms which are in the early stages of formation. One observer notes that “[f]irms that engage in portfolio financing can attract clients with alternative fee arrangements which offer flexibility and efficiency, attractive terms, and lower pay-out prices.” “Portfolio Litigation Financing – What’s in it for the Lawyers”, Lexology, Canada, September 24, 2017; https://www.lexology.com/library/detail.aspx?g=769d8b64-2770-43fd-842e-7ae97f484963.  Scholars have also documented the increasing role of ALF in allowing corporate defendants to manage their litigation risk.  See, e.g., Jonathan T. Molot, “A Market in Litigation Risk”, 76 U. Chi. L. Rev. 367 (2009).

Portfolio financing offers many well documented advantages to funders as well, such as diversifying risk, promoting an even flow of profits and losses, and providing long-range stability with predictable returns. It not only provides the potential to expand the cases which get funded, but may simultaneously help clarify the role of litigation finance in furthering access to justice by bringing within an aggregate funding portfolio claims which might not otherwise qualify for funding standing alone.  One commentator also noted that “if the litigation finance transaction is structured as portfolio financing, it may be possible to maintain the privilege if the lender only receives aggregate information about the portfolio of cases.”  Nathan M. Crystal, “Ethics Watch: Litigation Finance: An Overview of Issues and Current Developments (Part I)”, 28 S. Carolina Lawyer 12, 14 (May 2017).

For further information, please feel free to contact Roni A. Elias, who leads the litigation finance team at TownCenter Partners, LLC, a boutique litigation funding company that funds plaintiffs and plaintiffs’ law firms nationwide.  TownCenter Partners, LLC is a litigation funder with a social mission and continues to level the playing field in litigation. Mr. Elias can be reached at roni@yourtcp.com or (703) 570-5264. © 2018 Roni A. Elias. All rights reserved.

Topics:  Litigation finance, portfolio financing, portfolio funding, third-party funding, alternative litigation finance.

 

The Benefits of ALF in Class Actions

“Access to our courts is expensive—prohibitively so for the vast majority of class action plaintiffs”.  Tyler W. Hill, “Financing the Class: Strengthening the Class Action Through Third-Party Investment”, 125 Yale L.J. 484, 494 (2015).  Alternative litigation financing (“ALF”) is recognized as having the potential to not only improve access to the courts, but also make litigation more economically efficient and receptive to the traditional aims of tort and employment discrimination law.  See, e.g., Peter Charles Choharis, “A Comprehensive Market Strategy for Tort Reform”, 12 Yale J. on Reg. 435, 435 (1995).  These virtues apply to class action litigation as well.

The social benefits provided by ALF are being increasingly acknowledged.  Addressing the value of ALF, New York Supreme Court Justice Shirley Kornreich noted the “sound public policy of making justice accessible to all regardless of wealth” and recognized that the expense of litigation can otherwise deter litigation against “deep pocketed wrongdoers”.  Hamilton Capital VII LLC I v Khorrami LLP, No. 650791/2015, 2015 WL 4920281, at *5 (NY Sup Ct 17 August 2015).  See also Susan Lorde Martin, Op-Ed., “Leveling the Playing Field”, N.Y. Times (Nov. 15, 2010), http://www.nytimes.com/roomfordebate/2010/11/15/investing-in-someone-elses-lawsuit/leveling-the-playing-field (“Defendants in lawsuits often have insurers to finance their litigation expenses; litigation finance firms merely play that same role for plaintiffs, leveling the playing field.”)

Some observers have parsed public statements of certain litigation financiers and concluded that “litigation investors [] see their market as comprising large corporations [and] that it is politic to give class actions a wide berth”.  Deborah R. Hensler, “Third-Party Financing of Class Action Litigation in the United States: Will the Sky Fall?”, 63 DePaul L. Rev. 499, 507-508 (2014).  The evidence belies this conclusion.  ALF plays a critical and necessary role in class actions.

In perhaps the most detailed and comprehensive academic treatment to date, the “Financing the Class” journal article cited above “draws on recent literature about the benefits of third-party litigation financing”, and makes a meticulous case advocating the merits of promoting third-party financing of class actions. “Financing the Class”, id. at pp. 489, et seq.  The author – as well as other observers — note that class actions perform important compensatory and regulatory functions, and should therefore be encouraged.  ALF provides a mechanism for advancing the beneficial role of valid class actions, which might otherwise be unsustainable.  See also Jay Tidmarsh, “Can We Talk Money?”, JOTWELL (Courts Law) (Jan. 19, 2016), available at http://courtslaw.jotwell.com/can-we-talk-money/.

For further information, please feel free to contact Roni A. Elias, who leads the litigation finance team at TownCenter Partners, LLC, a boutique litigation funding company that funds plaintiffs and plaintiffs’ law firms nationwide.  TownCenter Partners, LLC is a litigation funder with a social mission and continues to level the playing field in litigation. Mr. Elias can be reached at roni@yourtcp.com or (703) 570-5264. © 2018 Roni A. Elias. All rights reserved.

Topics:  Litigation finance, portfolio financing, portfolio funding, third-party funding, alternative litigation finance, class actions.

ALF in Commercial and International Disputes

Scholars have noted that there are “three primary kinds of [alternative litigation financing (“ALF”)] companies currently operating in the market: (1) companies that finance consumers with legal claims; (2) companies that finance larger plaintiff-side commercial claims (‘business-against-business’ lawsuits); and (3) companies that provide funding to plaintiffs’ law firms.”  David Tyler Adams, “Laissez Fair: The Case for Alternative Litigation Funding and Assignment of Lawsuit Proceeds in Georgia”, 49 Ga. L. Rev. 1121, 1126 (Summer 2015), citing Steven Garber, Alternative Litigation Financing in the United States: Issues, Knowns, and Unknowns 1 (2010) available at http://www.rand.org/pubs/occasional_pape rs/OP306.html.

While ALF is generally viewed as funding plaintiffs involved in personal injury tort lawsuits, some ALF companies in the United States now focus their funding on large-scale commercial litigation and international disputes.  Michelle Boardman, “Insurers Defend and Third Parties Fund: A Comparison of Litigation Participation”, 8 J.L. Econ. & Pol’y 673, 676-77 (2012).  Observers have noted the significant role for ALF in these markets.  According to one article, while “[t]he market for lawsuit investment is already quite large in Australia, the U.K., and the U.S., [] it is poised for growth worldwide.”  Cassandra Burke Robertson, “The Impact of Third-Party Financing on Transnational Litigation”, 44 Case W. Res. J. Int’l L. 159 (2011).

In addition to providing funding, scholars have noted that companies providing ALF “also serve to provide [] [litigation] expertise” in developing venues, including arbitration.  Id.

To finance this expanding market, ALF companies are in turn increasingly being funded by banks.  While conventional banks do not loan funds to litigants whose only source of collateral consists of the potential proceeds from a lawsuit, some banks – including Citigroup, Commerce Bank of New Jersey, and Credit Suisse have all provided funding to LFCs — do finance ALF companies.   Binyamin Appelbaum, “Investors Put Money on Lawsuits to Get Payouts”, N.Y. Times, Nov. 14, (2010) http://www.nytimes.com/2010/11/15/business/15lawsuit.html?pagew anted=all&_r=0.

For further information, please feel free to contact Roni A. Elias, who leads the litigation finance team at TownCenter Partners, LLC, a boutique litigation funding company that funds plaintiffs and plaintiffs’ law firms nationwide.  TownCenter Partners, LLC is a litigation funder with a social mission and continues to level the playing field in litigation. Mr. Elias can be reached at roni@yourtcp.com or (703) 570-5264. © 2018 Roni A. Elias. All rights reserved.

Topics:  Litigation finance, portfolio financing, portfolio funding, third-party funding, alternative litigation finance, commercial, banks, international.

Benefits of ALF Increasingly Recognized

As information and experience regarding alternative litigation financing (“ALF”) continues to develop, new and increasingly significant benefits to both litigants and the civil justice system are being recognized.

Opponents of ALF have historically argued that use of ALF will result in ethical violations, frivolous litigation, allowing a third party to control the litigation and make decisions, an attorney abandoning his or her own judgment in favor of the ALF company’s judgment, and a waiver of the attorney-client privilege in any given case.  John Beisner, “Issues Paper Concerning Lawyers’ Involvement in Alternative Litigation Financing”, ABA Commission on Ethics 20/20. February 15, 2011. September 7, 2011. http://www.americanbar.org/content/dam/aba/migrated/2011_build/ethics_2020/ comments_on_alternative_litigation_financing_issues_paper.authcheckdam.pdf.

It was recently noted that little evidence exists to support these arguments.  “The Business of Litigation Finance is Booming” (May 30, 2017), https://www.bloomberg.com/news/articles/2017-05-30/the-business-of-litigation-finance-is-booming.

Evidence of the benefits of ALF continues to mount, however.  Proponents of ALF – both plaintiffs and defendants — note that ALF may actually improve the current volume of pending cases by weeding out frivolous litigation that ALF companies deem a bad investment.  Indeed, the American Legal Finance Association recommends that member companies only provide plaintiff funding if the plaintiff has a legitimate claim and is represented by an attorney.  Working Group on Alternative Litigation Finance. “Comments: Working Group on Alternative Litigation Finance, White Paper on Alternative Litigation Finance.” American Bar Association. November 28, 2011. December 15, 2011. http://www.americanbar.org/content/dam/aba/administrative/ethics_2020/20111128-alf_white_paper_comments_all. authcheckdam.pdf.

For further information, please feel free to contact Roni A. Elias, who leads the litigation finance team at TownCenter Partners, LLC, a boutique litigation funding company that funds plaintiffs and plaintiffs’ law firms nationwide.  TownCenter Partners, LLC is a litigation funder with a social mission and continues to level the playing field in litigation. Mr. Elias can be reached at roni@yourtcp.com or (703) 570-5264. © 2018 Roni A. Elias. All rights reserved.

Topics:  Litigation finance, portfolio financing, portfolio funding, third-party funding, alternative litigation finance, state regulation, ALF benefits, ALF data.

As information and experience regarding alternative litigation financing (“ALF”) continues to develop, new and increasingly significant benefits to both litigants and the civil justice system are being recognized.

Opponents of ALF have historically argued that use of ALF will result in ethical violations, frivolous litigation, allowing a third party to control the litigation and make decisions, an attorney abandoning his or her own judgment in favor of the ALF company’s judgment, and a waiver of the attorney-client privilege in any given case.  John Beisner, “Issues Paper Concerning Lawyers’ Involvement in Alternative Litigation Financing”, ABA Commission on Ethics 20/20. February 15, 2011. September 7, 2011. http://www.americanbar.org/content/dam/aba/migrated/2011_build/ethics_2020/ comments_on_alternative_litigation_financing_issues_paper.authcheckdam.pdf.

It was recently noted that little evidence exists to support these arguments.  “The Business of Litigation Finance is Booming” (May 30, 2017), https://www.bloomberg.com/news/articles/2017-05-30/the-business-of-litigation-finance-is-booming.

Evidence of the benefits of ALF continues to mount, however.  Proponents of ALF – both plaintiffs and defendants — note that ALF may actually improve the current volume of pending cases by weeding out frivolous litigation that ALF companies deem a bad investment.  Indeed, the American Legal Finance Association recommends that member companies only provide plaintiff funding if the plaintiff has a legitimate claim and is represented by an attorney.  Working Group on Alternative Litigation Finance. “Comments: Working Group on Alternative Litigation Finance, White Paper on Alternative Litigation Finance.” American Bar Association. November 28, 2011. December 15, 2011. http://www.americanbar.org/content/dam/aba/administrative/ethics_2020/20111128-alf_white_paper_comments_all. authcheckdam.pdf.

For further information, please feel free to contact Roni A. Elias, who leads the litigation finance team at TownCenter Partners, LLC, a boutique litigation funding company that funds plaintiffs and plaintiffs’ law firms nationwide.  TownCenter Partners, LLC is a litigation funder with a social mission and continues to level the playing field in litigation. Mr. Elias can be reached at roni@yourtcp.com or (703) 570-5264. © 2018 Roni A. Elias. All rights reserved.

Topics:  Litigation finance, portfolio financing, portfolio funding, third-party funding, alternative litigation finance, state regulation, ALF benefits, ALF data.