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

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All Results for Third Party Litigation Funding (TPLF)

  1. 2019 Winter | ILR Research Review | Volume 6, Issue 3

    December 19, 2019 | Research

    Our Winter 2019 Research Review looks at a number of legal trends that are creating increasingly complex litigation and compliance burdens for companies-leaving the door open for plaintiffs' lawyers to profit.... Read More

  2. Australian High Court Ruling Will Disrupt Litigation Funders' Business Model

    December 05, 2019 | News

    The High Court of Australia ruled yesterday that courts have no power to order class members to pay a portion of their recoveries to litigation funders, which Law.com says could be "a major blow" to the industry.... Read More

  3. Litigation Funders Poised For Major Investment Infusion

    November 20, 2019 | News

    A new survey found that litigation funders have a staggering $9.52 billion under management in the U.S. and are actively seeking new portfolio-style deals, Law360 reports.... Read More

  4. Rules Committee To Continue Work On TPLF

    November 01, 2019 | Blogs

    In another welcome sign, the Advisory Committee on Civil Rules for the U.S. courts announced this week that it will continue to study the effects of third party litigation funding (TPLF) in civil litigation and the potential need for a disclosure requirement. ... Read More

  5. Lead Generators Accused of Fraud

    October 31, 2019 | News

    A mass tort lead generator firm was accused by its investors of fraud, who alleged they were misled about the potential returns on their investments, Reuters reports.... Read More

  6. In the News Today - October 28, 2019

    October 28, 2019 | News

    Pending EU Collective Action Directive Could Ignite TPLF Abuses in Europe... Read More

  7. Uncharted Waters: Analysis of TPLF in European Collective Redress

    October 15, 2019 | Research

    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

  8. In the News Today - October 3, 2019

    October 03, 2019 | News

    ILR Submits Comments to California Bar Regarding Proposed Rule Changes... Read More

  9. ILR Submits Comments to California Bar Regarding Proposed Rule Changes

    October 02, 2019 | Blogs

    Last week, the U.S. Chamber Institute for Legal Reform (ILR) submitted comments to the State Bar of California regarding potential rules changes that accentuate our long-standing concerns about third party litigation funding.... Read More

  10. In the News Today - September 26, 2019

    September 26, 2019 | News

    New Study Finds Big Swing in Judicial Decisions After Election; Funders, Advertisers "Pouring Money" Into Medical Device Litigation... Read More