Addressing Ethical Concerns in the Industry

Modern-day third-party funding began to take off across the world in the 1990s. In 2010, the litigation finance sector was still in its infancy here in the United States. Over the next decade, we have been able to witness its burgeoning growth and expansion. A recent estimate pegged the United States’ market size at $9.5 billion. As we continue through the new decade, many are hopeful about the industry’s promising future.

Ethical concerns remain at the forefront of challenges that the industry must address. According to a 2019 survey conducted by Bloomberg Law, 92% of funders agree that the litigation finance structure is transparent to clients. Strikingly, only 54% of lawyers agree that the litigation finance structure is open to clients.

With an increased level of clarity, these ethical concerns can be mitigated. Moving into this decade, some predict that courts and legislatures will more clearly define the laws that govern litigation finance practices. By developing a more standardized industry, a more efficient market shall materialize.

Litigation finance’s perceived lack of transparency may also stem from a lack of familiarity with the industry. A 2019 study found that only approximately 69% of surveyed lawyers identified themselves as “very familiar” with litigation finance. Comparatively, when that same group was questioned in 2017, less than 35% of the surveyed lawyers were “very familiar” with litigation finance. As lawyers gain a better understanding of the litigation finance sector, their perception of the industry’s transparency may also change for the better.

Looking into the future, it is clear that, while this sector is growing at a rapid pace, there are still obstacles that need to be overcome. Through defined laws and increased awareness, the litigation finance industry will address and mitigate ethical concerns.

Topics: litigation financing, litigation funding, future, litigation, third-party funding, disclosure, ethics, technology

Works Cited:

Bloomberg Law, Bloomberg Law, https://src.bna.com/MxC.

Disclosure: It’s the Claimant’s Choice, TownCenter Partners LLC (2020),

https://yourtcp.com/wordpress/?p=1115 (last visited Jun 16, 2020).

Jay Greenberg, Why Litigation Finance Transformed in the 2010s, And What 2030 Might Bring

The Recorder (2020), https://www.law.com/therecorder/2020/03/16/why-litigation-finance-transformed-in-the-2010s-and-what-2030-might-bring/ (last visited Jun 16, 2020).