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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All Results for Third Party Litigation Funding (TPLF)

  1. New Research on Lawsuit Trends Headlines Chamber's Legal Reform Summit

    October 23, 2013 | Press Release

    ILR today identified asbestos, class-action, data privacy, and False Claims Act lawsuits among the leading lawsuit trends, in a paper released at its 14th Annual Legal Reform Summit. ... Read More

  2. Third Party Litigation Financing in Australia: Class Actions, Conflicts and Controversy

    October 23, 2013 | Research

    Authored by Moira Saville of King & Wood Mallesons, this paper addresses the lack of regulation of third-party litigation financing in Australia.... Read More

  3. In the News

    September 24, 2013 | News and Blog

    On Monday, BP asked a court to halt payments from the gulf oil spill settlement fund until the administrator implements recommendations to improve efficiency and accounting controls.... Read More

  4. In the News

    September 20, 2013 | News and Blog

    As part of its $920 million settlement with US and UK regulators, JP Morgan has agreed to an admission of wrongdoing in the "London Whale" case. ... Read More

  5. In the News

    September 18, 2013 | News and Blog

    The world's biggest litigation funder, Burford Capital, announced a 41% increase in operating income from last year. Burford also disclosed it currently has $266 million invested in 29 litigation financing operations.... Read More

  6. Recent Cases Underscore Problems With TPLF

    September 16, 2013 | News and Blog

    "Investing in high-stakes lawsuits isn't for the faint of heart," writes Jennifer Smith in the Wall Street Journal.... Read More

  7. Improving the Environment for Business in Australia

    September 12, 2013 | Research

    In recent years, the use of third party litigation financing ("TPLF") in Australia has resulted in a notable proliferation of class actions and other funded lawsuits. The growth of the lawsuit investment industry has occurred largely without government oversight, giving rise to serious issues yet to be addressed. As a result, the increase in TPLF-financed litigation has in turn increased the cost of doing business in Australia, a trend which will continue if the current situation remains unchanged.... Read More

  8. Australian Press Highlights New ILR Proposal for Reforming Oversight of Third Party Litigation Financing

    September 12, 2013 | News and Blog

    In recent years, the use of third party litigation financing ("TPLF") in Australia has resulted in a notable proliferation of class actions and other funded lawsuits.... Read More

  9. In the News Today - March 24, 2014

    March 24, 2013 | News and Blog

    "We're particularly concerned about developments here in third-party litigation financing," ILR president Lisa Rickard told the Australian Financial Review. ... Read More

  10. Stopping the Sale on Lawsuits: A Proposal to Regulate Third-Party Investments in Litigation

    October 24, 2012 | Research

    Third-party investments in litigation represent a clear and present danger to the impartial and efficient administration of civil justice in the United States. Such third-party litigation financing ("TPLF") occurs when a specialized investment company provides money to a plaintiff (or counsel) to finance the prosecution of a complex tort or business dispute. In exchange for this financial assistance, the plaintiff (or counsel) agrees to pay the investor a portion of any proceeds obtained through the litigation.... Read More