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

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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. Beware of Litigation Funders in Class Actions

    March 21, 2014 | News and Blog

    ILR president Lisa Rickard cautions the Australian government to take note of the growing influence of litigation funders in class action litigation.... Read More

  2. Investing In Lawsuits

    February 25, 2014 | News and Blog

    "Turning litigation into a business is corrosive of almost every good value of the rule of law," Philip Howard writes.... Read More

  3. In the News Today - February 21, 2014

    February 21, 2014 | News and Blog

    Third-party litigation financing can lead to conflicts of interests and prolong litigation, Gerald Skoning warns in the Wall Street Journal.... Read More

  4. Should England Learn From Australia?

    February 18, 2014 | News and Blog

    Australia has experienced major problems with its litigation system recently.... Read More

  5. Court Ruling Calls into Question Funder Assertions About Meritless Claims

    January 17, 2014 | News and Blog

    The recent U.K High Court ruling on claims brought by Excalibur Ventures LLC for more than $1.75 billion calls into question a key assertion made by the third party litigation funding industry - that litigation funding won't increase the number of meritless claims.... Read More

  6. Litigation Financing in the U.S.

    January 14, 2014 | News and Blog

    Third-party litigation financing is a practice that is more common overseas than in the United States but that could be changing, reports the Wall Street Journal.... Read More

  7. Unregulated Growth of TPLF Threatens UK Justice System

    January 08, 2014 | News and Blog

    The Global Legal Post calls for statutory oversight of the United Kingdom's third-party litigation funding industry in order to prevent abuse, ensure transparency, and avoid conflicts of interest.... Read More

  8. In the News Today - December 17, 2013

    December 17, 2013 | News and Blog

    Successor liability issues are becoming a bigger concern during M&A deals, due in part to more aggressive FCPA enforcement.... Read More

  9. Lawsuit Financing Code is 'Toothless'

    December 13, 2013 | News and Blog

    Mary Terzino says a voluntary code of conduct for litigation funders is insufficient.... Read More

  10. Funding Technique Creates Conflicts

    December 02, 2013 | News and Blog

    With the election of a new federal government, the debate over third-party litigation financing has heated up. In this atmosphere, it is truly unfortunate that some, including Hugh McLernon of IMF (Australia) in The Australian recently, are brushing off the very real problems posed by the practice.... Read More