Third Party Litigation Funding (TPLF)

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Third party litigation funding (TPLF) is the practice of hedge funds and other financiers investing in lawsuits in exchange for a percentage of any settlement or judgment. TPLF is a global industry with approximately $100 billion available to funders and firms. The practice, while lucrative for those betting on cases, increases the probability that meritless claims will be brought, inserts questions about who is actually controlling the litigation other than the plaintiff and defendant, and makes settling lawsuits far more difficult and expensive. Even the funders admit they deliberately complicate litigation. Allison Chock, Chief Investment Officer at Bentham IMF (one of the world’s largest litigation funders) stated, “We make it harder and more expensive to settle cases,” highlighting TPLF’s distortion of our civil justice system. The U.S. Chamber Institute for Legal Reform (ILR) works to bring TPLF, which threatens to undermine long accepted norms in our judicial system, out of the shadows. Read More...

Unlike other financial products, TPLF is largely unregulated around the world. The practice operates in secret, making it difficult for judges and parties to know who actually has an interest in the outcome of the litigation. TPLF also presents various ethical issues, particularly when a funder is directly financing a law firm or lawyer and cutting claimants out of certain significant litigation decisions.

On multiple occasions, ILR has urged the federal Committee on Rules of Practice and Procedure and Advisory Rules Committees to adopt a disclosure rule to bring a degree of transparency to TPLF. Recently, ILR led a coalition of 30 business and legal organizations in sending a letter the Committee debunking the funders’ arguments against disclosure and transparency.

ILR believes TPLF, like other outside interests in litigation, should be subject to reasonable transparency standards.

01/01/2019

Suggested Resources

Research
  • ILR Briefly: Third Party Litigation Funding in Qui Tam False Claims Act

    ILR Briefly: Third Party Litigation Funding in Qui Tam False Claims Act

    July 17, 2020

    In addition to investing in portfolios of private lawsuits, third party litigation funders have started financing qui tam False Claims Act cases brought on behalf of the U.S. government. The catch is that up until very recently, the government had no insight into whether funders were involved or the level of control they exerted. That changed in June 2020, when the Department of Justice announced a policy change to start shedding some light on this opaque practice. Read More

  • ILR Briefly COVID-19 Series: State Liability Problems and Solutions

    ILR Briefly COVID-19 Series: State Liability Problems and Solutions

    May 21, 2020

    As states reopen and continue to respond to the needs of their citizens and economies, it is important that they consider offering liability protections to prevent a wave of COVID-19 lawsuits at the state level. This edition of ILR Briefly documents major hot spots for COVID-19 litigation under state law and provides an array of policy solutions to prevent lawsuits from disrupting states' economic recoveries. Read More

All Results for Third Party Litigation Funding (TPLF)

  1. Litigation Funders Join Together To Form Global Advocacy Group

    September 10, 2020 | News

    The twelve leading litigation finance firms have set up the International Legal Finance Association (ILFA) according to a report on Law.com.... Read More

  2. Study: Mass Tort Plaintiffs Paying Dearly For Loans, Regulation Needed

    September 01, 2020 | News

    ... Read More

  3. TPLF, Short-Seller Use Undermines Securities Class Actions

    August 26, 2020 | News

    Two factors in the securities class action arena are exacerbating the potential for conflicts of interest according to an expert analysis by Nessim Mezrahi in Law 360. ... Read More

  4. ILR Briefly: Third Party Litigation Funding in Qui Tam False Claims Act

    July 17, 2020 | Research

    In addition to investing in portfolios of private lawsuits, third party litigation funders have started financing qui tam False Claims Act cases brought on behalf of the U.S. government. The catch is that up until very recently, the government had no insight into whether funders were involved or the level of control they exerted. That changed in June 2020, when the Department of Justice announced a policy change to start shedding some light on this opaque practice.... Read More

  5. In the News Today - July 7, 2020

    July 07, 2020 | News

    ICYMI: DOJ Eyes Requirement That False Claims Act Whistleblowers Disclose Litigation Funding... Read More

  6. Litigation Funder Gave $100K To Plaintiff, Expects $2 Million Back

    July 02, 2020 | News

    A lawsuit in New York shows what happens when a litigation funder's client hits a jackpot and decides not to settle up, according to a report in Legal Newsline. ... Read More

  7. ILR Research Review Volume 7 Issue 1

    June 29, 2020 | Research

    This edition of the ILR Research Review contains research examining the myriad liability challenges flowing from COVID-19 and describing potential administrative and legislative solutions, as well as papers dedicated to the ongoing crisis in securities litigation, the growth of and problems with the third party litigation funding industry, and insights into the strategy behind trial lawyer advertising.... Read More

  8. From the President's Desk: International Litigation Trends Taking Center Stage Across the Globe

    June 08, 2020 | News

    In his most recent blog post, ILR President Harold Kim highlights some major international developments that could have an impact on the business community, notably in the United Kingdom and Australia.... Read More

  9. ILR Briefly COVID-19 Series: State Liability Problems and Solutions

    May 21, 2020 | Research

    As states reopen and continue to respond to the needs of their citizens and economies, it is important that they consider offering liability protections to prevent a wave of COVID-19 lawsuits at the state level. This edition of ILR Briefly documents major hot spots for COVID-19 litigation under state law and provides an array of policy solutions to prevent lawsuits from disrupting states' economic recoveries.... Read More

  10. ILR Briefly COVID-19 Series: Liability Overview

    April 23, 2020 | Research

    As Americans and businesses of all sizes are working together to get through the COVID-19 health crisis, plaintiffs' lawyers have already begun filing COVID-19-related lawsuits. Limiting litigation abuse is essential to making available the tools and resources needed to combat the virus, and ultimately to spurring economic recovery once the immediate health crisis has been resolved. This edition of ILR Briefly explores the current and anticipated types of litigation coming out of the COVID-19 pandemic.... Read More