Litigation Financing: A View from the Bench

As more courts recognize the legality of litigation funding, and as more litigants discover its benefits, there are fewer questions about its legitimacy.  One sign of this increasing acceptance is the recent association between a former federal judge and a litigation funding company.  In an announcement of the judge’s appointment to a management committee for the company, the judge explained what’s good about litigation funding.

The judge is Vaughn Walker, former chief judge of the United States District Court for the Northern District of California.  Judge Walker sat on the Northern District bench from 1989 to 2011, after practicing for many years at the prestigious San Francisco firm, Pillsbury Madison & Sutro. Between 2004 and 2011, he served as the court’s chief judge. Since his retirement from the judiciary, he lectures at Stanford University Law School, as well as Boalt Hall Law School at the University of California, Berkeley.

In late 2016, Judge Walker accepted an appointment to the investment committee of a large legal funding company.  The committee’s role is to evaluate and consider cases that are proposed for funding.  The committee follows a prescribed method for making case evaluations and for making its recommendation about whether a case should be funded.

It is this experience with the evaluation process that gives Judge Walker comfort about how litigation financing affects the pursuit of justice.  He described the company’s litigation funding analysis as “quite rigorous,” concluding that it was unlikely to ever provide support for “spurious” litigation.  In particular, Judge Walker rejected arguments raised against litigation funding, especially those often made by the United States Chamber of Commerce.  Referring to litigation financing, he noted:

What it may very well do is to enable parties who have meritorious claims to prosecute those claims more effectively because they have the wherewithal to do so and to make settlement decisions based less upon immediate need than the actual prospects of the litigation itself. . . . If anything, I think, by opening up an alternative source of capital for the litigation, it may actually improve the quality of litigation outcomes, rather than the other way around.

Having devoted his professional career to the preservation of a just and fair judicial system, there can be no doubt that Judge Walker does not endorse litigation funding lightly.  Indeed, it is hard to imagine that a person like Judge Walker would associate himself with anything that did not meet the highest standard of integrity.  His participation in the litigation financing business is a testament to the stability of litigation funding’s place in the legal world.

Topics:  litigation finance, legal reform, third-party funding, litigation costs, non-recourse financing, alternative litigation funding, California, federal judge

 Works Cited:  Jessica Karmasek, Former Calif. Federal Judge Now Serves on Litigation Funding Company’s Investment Committee, Legal NewsLine (Jan. 31, 2017)

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