Funding litigation a billion-dollar business

It is now estimated to be a billion-dollar business and growing, as third-party funders and investors are becoming more embedded in the litigation game, but the growth is matched by concern over whether injured parties are getting the best deal, and who ultimately is making the decisions during cases.

It is estimated around 30 percent of legal firms now tap into third-party funds to help bankroll either cases by individuals or class actions. This is up from 13 percent just four years ago. The average amount of investment in firms has also grown, with nearly 30 percent of private practice attorneys and firms surveyed reported using alternative litigation funding, compared to seven percent in 2013.

Some companies in third-party funding are open about their business, particularly those involved primarily in business-to-business litigation but the role of investors and funders in the personal injury and class action cases is a little murkier. There are moves to introduce more transparency, both at the federal and state level.

The Fairness in Class Action Litigation Act, passed by the U.S. House in March, includes a provision that district courts must be told of all funders of any action. A federal court in San Francisco became the first in the nation to require the automatic disclosure of third-party funding agreements for proposed class action lawsuits. The U.S. District Court for the Northern District of California earlier this year announced changes to its standing orders for all its judges following the case of Gbarabe v. Chevron Corp.

Under the order, judges sitting in Oakland, San Jose and Eureka, require third parties funding a proposed class action to disclose their involvement in the lawsuit in a joint case management statement.

Topics: Litigation Funding, Class Action Litigation Act, U.S. District Court

Work cited: John Breslin, August 2017

https://legalnewsline.com/stories/511198462-funding-litigation-a-billion-dollar-business