Fortress Under Siege: The Hidden Power Behind Litigation Financing

Third-party litigation funding (TPLF) has emerged as a multibillion-dollar global industry, operating largely in secrecy, and driven by profit. A recent Bloomberg Law article about Fortress Investment Group's aggressive and opaque practices in litigation funding highlights the urgent need for transparency and safeguards in this burgeoning sector. By closely monitoring law firms, exerting intense control over litigation strategies, and operating in the shadows, Fortress exemplifies the potential for abuse and ethical dilemmas inherent in TPLF.

The article explains that Fortress, with $6.6 billion in legal assets and $2.9 billion invested in intellectual property, funds law firms in high-profile mass tort suits, such as the Roundup cases against Bayer AG and talcum powder litigation against Johnson & Johnson. Fortress' aggressive approach includes meticulous monitoring of law firms, which could result in Fortress exerting significant influence or control over litigation. This, in turn, can undermine lawyers' professional independence and disrupt their ethical duties to clients.

According to Bloomberg Law, Fortress's potential influence and control over funded law firms is extensive. The company tracks the bank accounts of these firms weekly and closely monitors the progress of their cases. This level of oversight allows Fortress to potentially influence litigation strategies and decisions, effectively making them a key player in the legal process. One litigation funder remarked that he declined funding from Fortress, stating, "they choke you to death and then put you out of business." Such control can lead to conflicts of interest, where the funder's profit motives may not align with the best interests of the plaintiffs. For instance, Fortress could be in the position to pressure law firms to pursue or prolong litigation to maximize returns for investors, even when a settlement might be in the best interest of the plaintiffs.

Numerous concerns about TPLF have been raised, emphasizing the need for greater transparency. Substantial control or influence exercised by litigation funders like Fortress over cases contradicts their claims of being passive investors and is about prioritizing their financial returns over a plaintiff's best interests. This lack of transparency undermines legal ethics and prolongs litigation, harming the American economy, businesses, and consumers.

Third-party litigation funding also poses national security risks, like the potential of foreign adversaries using TPLF to undermine U.S. interests, gain access to sensitive information, or evade sanctions. For example, a Chinese TPLF firm financed multiple intellectual property lawsuits against Samsung in U.S. courts, raising concerns about the misuse of privileged information. And Bloomberg has reported that Russian billionaires with ties to Vladimir Putin have funded litigation in the United States and the United Kingdom to evade sanctions.

Advocacy for TPLF disclosure and other safeguards has led to TPLF disclosure bills being introduced in Congress and state-level reforms being enacted in Montana, Indiana, Louisiana, and West Virginia, which require the disclosure of funding agreements and hold funders accountable for financing frivolous lawsuits.

We are committed to advocating for greater transparency in the TPLF industry. By pushing for legislative reforms and raising awareness about the hidden dangers of TPLF, we aim to ensure that our legal system serves the interests of justice and not the profit motives of undisclosed financiers. It is imperative that we bring TPLF out of the shadows to protect the integrity of our civil justice system and maintain public trust.