OPINION: 3rd-Party Litigation Funding Needs Transparency

Law360, New York (October 17, 2016, 1:46 PM EDT) -- Lisa A. Rickard

Mark A. Behrens Investors are pumping unprecedented sums of money into financing litigation, lured by the prospect of payoffs untethered to economic or market conditions. Litigation funders make money gambling on other people’s lawsuits; they front money to plaintiffs’ law firms in exchange for an agreed-upon cut of any settlement or money judgment. The practice has taken off in recent years with the loosening of common law doctrines, such as champerty, that long prohibited the outside financing of litigation.

Legal Claims As Assets

To litigation funders, a lawsuit is more than a dispute; it is an asset, just...

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