Third Party Financing: Ethical and Legal Ramifications in Collective Actions

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November 19, 2009

This paper begins with an overview of third party litigation financing. It next examines the current third party financing practices of a number of European jurisdictions. Then, it sets forth ILR’s critique of the practice, particularly the incentives it creates to engage in frivolous and abusive litigation. ILR also presents a case study of the Commonwealth of Australia, the first jurisdiction to permit third party litigation funding, where such funding has dramatically increased litigation and given investors pervasive — even total — control over a claimant’s case. Finally, the paper concludes that such funding should be prohibited altogether in collective litigation.

 
11/19/2009