Litigation Funders and Clients on Different Pages


The past decade has seen the rise of litigation finance in the United States. Despite its relative infancy, the complex industry is here to stay. As we continue through this next decade, there is a glaring issue that must be addressed within the sector: transparency. There is a disconnect of information, opinions, and impressions regarding nearly every aspect of the litigation finance industry, from market size to ethical concerns. How these disparities are confronted will inevitably shape the sector for the years to come.

Disclosure Rules

Arguably one of the most controversial aspects of third-party financing is whether it should be disclosed during discovery. At the moment, disclosure is not required for litigation funding agreements. Certain pieces of information, such as documents and materials a party expects to utilize, must be initially disclosed, per Rule 26 of the Federal Rules of Civil Procedures. Currently, Rule 26 does not extend to litigation financing agreements. However, it should be noted that some states have passed or are considering adopting mandatory disclosure for litigation funding agreements.


While the federal rule does not require disclosure, when surveyed, 41% of lawyers were “not sure” of how often funding must be disclosed in court. Contrastingly, nearly half of funders maintained that courts rarely compelled disclosure in court. There is a chasm in industry understanding. Moving forward, the disconnect of misinformation must be bridged


When surveyed about their concerns regarding litigation finance, the most significant worries that lawyers expressed were:

  • Ethical implications
  • Client privilege
  • Disclosing the financing in court


In contrast, when litigation funders were asked what their clients’ greatest worries were, funders explained that their clients were mainly concerned about:

  • Understanding how litigation finance works
  • Disclosing the financing in court


While there are some disparities between lawyers’ thoughts and feelings and what funders believe are lawyers’ biggest concerns, the continued conversation will ensure everyone is on the same page.


For more information visit Town Center Partners.


Topics: litigation finance, third-party funding, legal funding, disclosure, funder, lawyer



TownCenter Partner Team

TownCenter Partners, LLC lead Asset Manager is Mr. Roni A. Elias. From modest beginnings, and with the help of a hand-picked dream team of professionals we have built one of the most dynamic and fastest growing companies in the country. TownCenter Partners LLC(TCP) is a real estate partner and master-planner providing development, leasing, management, and third party services. The company’s demonstrated ability to apply big ideas in creative and innovative ways has played a defining role in the firm’s success. Yet, TCP's most important insight has been the core understanding that it is not sight lines or site plans, but human activity, that defines a space and creates a place.