Third Party Litigation Funding (TPLF)

  • Home >
  • Issues >
  • Third Party Litigation Funding (TPLF)

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 - October 3, 2019

    October 03, 2019 | News

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

  2. 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

  3. 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

  4. In the News Today - September 20, 2019

    September 20, 2019 | News

    Plaintiffs Offer Judge Chance to Review TPLF When Funder Has Input on Litigation Decisions; New Jersey Supreme Court Is State's "Glimmer of Hope"... Read More

  5. In the News Today - September 11, 2019

    September 11, 2019 | News

    Third Party Funders Now Pitching Canadian Start-Ups... Read More

  6. Burford Sued By Shareholders Over Stock Drop

    August 22, 2019 | News

    A class of Burford Capital shareholders has sued the company for allegedly painting a "misleading picture" for investors, Law360 reports.... Read More

  7. Burford Controversy Might "Cool Down The Hype" Around Litigation Funding

    August 15, 2019 | News

    Some legal experts told Law.com the third party litigation funding industry "might not look the same in the aftermath" of the short-selling and accounting controversy that has embroiled industry leader Burford Capital.... Read More

  8. In the News Today - August 13, 2019

    August 13, 2019 | News

    Litigation Funder, Short Seller, Race To Regulator To Urge Probes... Read More

  9. In the News Today - August 12, 2019

    August 12, 2019 | News

    "London's Largest Divorce" Offers New Questions About Litigation Funding... Read More

  10. Litigation Funding Back "In The Spotlight" Thanks To Burford Crisis

    August 09, 2019 | News

    The accusations of misleading accounting facing Burford Capital have "raised broader questions" about the litigation funding industry, the Financial Times writes.... Read More