Poll Shows Increasing Use of Third-Party Funding

A recent survey shows that about 25% of in-house counsel, mainly those at tech companies, have direct experience using litigation funding. The survey results also show some ambivalence about litigation funding. Although the decision to use third-party funding is often made by in-house counsel, those same lawyers have some ethical reservations about working with outside funders.

The survey respondents mainly came from in-house legal departments in the financial and banking industries; less than 5 per cent of respondents said they were in the tech sector. Even so, among those who said they had actually worked with a funder in a litigation matter, 36 per cent came from tech companies.

According to the survey results, most of the in-house respondents said that the decision to seek litigation finance is driven by company legal departments, not by executive management. That result presents an interesting contrast with another recent survey of law firm lawyers, who believed that the decision to bring in third-party funders was usually driven by outside lawyers.

Despite their willingness to work with funders, a number of in-house counsel expressed reservations about litigation funding. Of those who had used it, 30 per cent said they would recommend it strongly, while 45 per cent said they would recommend it with reservations; 25 per cent said they would not recommend it.

Of those respondents who had not used litigation finance and said they would not consider using it, the primary reason cited was “ethical reservations,” followed by having heard “negative information” about the practice.

Keywords: litigation finance, third-party litigation funding, in-house counsel

Work Cited:  Ben Hancock, In-House Counsel Poll Finds a Quarter Have Used Litigation Finance—Mainly in Tech, The Recorder (Feb. 28, 2018) available at https://www.law.com/therecorder/2018/02/28/in-house-counsel-poll-finds-a-quarter-have-used-litigation-finance-mainly-in-tech/