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
  • Selling More Lawsuits, Buying More Trouble: Third Party Litigation Funding A Decade Later

    Selling More Lawsuits, Buying More Trouble: Third Party Litigation Funding A Decade Later

    January 27, 2020

    Selling More Lawsuits, Buying More Trouble finds that the third party litigation funding industry has grown massively since ILR's original research on the subject, and that the ethical and practical concerns we identified with TPLF in 2009 were well-founded. Read More

  • Uncharted Waters: Analysis of TPLF in European Collective Redress

    Uncharted Waters: Analysis of TPLF in European Collective Redress

    October 15, 2019

    Third party litigation funding-the practice of hedge funds investing in litigation in exchange for a cut of the proceeds-has begun to take root in Europe. Unfortunately, an almost total lack of transparency and regulation means that even as its supporters promise greater "access to justice," TPLF threatens the integrity of European civil justice systems. This ILR research paper details the state of play for TPLF in Europe and around the world, and urges EU legislators to take up a number of specific reforms to protect consumers and businesses. Read More

All Results for Third Party Litigation Funding (TPLF)

  1. In the News Today -March 20, 2020

    March 20, 2020 | News

    Oklahoma Senate Votes to Put a Cap on Non-Economic Damages and TPLF Deal Raises Ethical Red Flags.... Read More

  2. In the News Today -March 11, 2020

    March 11, 2020 | News

    ILR Urges DC Bar to Reject Rules That Could Expand TPLF... Read More

  3. ILR Urges DC Bar to Reject New Rules That Could Expand TPLF

    March 10, 2020 | Blogs

    The U.S. Chamber Institute for Legal Reform (ILR), and three other associations, strongly urged the District of Columbia Bar Association to reject a proposed rule change that would further the influence of third party litigation funding (TPLF) in the District's legal system.... Read More

  4. In the News Today - March 6, 2020

    March 06, 2020 | News

    Bloomberg Law's 2019 Litigation Finance Industry Survey revealed that lawyers who are interested in litigation financing are more likely to obtain funding for a single case than for a portfolio of cases.... Read More

  5. NY City Bar Group Pushes to Allow Third Party Litigation Financing

    March 03, 2020 | News

    A working group of the New York City Bar Association released a report that calls for "less restricted access" to third-party litigation funding (TPLF), according to Bloomberg Law.... Read More

  6. Litigation Funding Bills Pop Up in State Legislatures

    February 18, 2020 | News

    According to an analysis by Claims Journal, several state legislatures are considering bills to "impose more controls on litigation funding companies."... Read More

  7. In the News Today - February 14, 2020

    February 14, 2020 | News

    States Reject First Opioid Settlement Offer; "ALI's Proposed Restatement of Copyrights has the Potential to Harm the Creative Industries;" Financial Times Columnist Says Burford Overstating Claims... Read More

  8. Litigation Funding Industry Continues To Expand

    February 04, 2020 | News

    Litigation funding giant Burford Capital is boasting a record number of investing commitments despite a tumultuous year, Law.com reports.... Read More

  9. In the News Today - January 28, 2020

    January 28, 2020 | News

    "Selling More Lawsuits, Buying More Trouble: Third Party Litigation Funding A Decade Later;" Defense Lawyer Stresses Need For "Robust" Compliance Programs... Read More

  10. Official Says DOJ Probing TPLF in False Claims Act Cases

    January 28, 2020 | News

    During a recent keynote address, Deputy Associate Attorney General Stephen Cox said the U.S. Department of Justice (DOJ) is looking into the use of third party litigation funding (TPLF) in False Claims Act cases, Law360 reports.... Read More