12/09/2024 | News release | Distributed by Public on 12/09/2024 19:13
ILR's newly released research, Grim Realities: Debunking Myths in Third-Party Litigation Funding(TPLF) helps to shine some light on this shadowy-and growing-industry. The research argues that TPLF, despite claims of increasing access to justice, operates with minimal transparency and often at the expense of the people it claims to help.
TPLF is a multi-billion-dollar industry that allows litigation funders to line their own pockets. The lack of transparency requirements for TPLF means that, oftentimes, funders can make agreements directly with lawyers while the courts and the opposing parties are left unaware of a funder's involvement in a case. This opens the door to serious problems, including:
The paper disputes the industry's claim that it is a positive influence on civil justice systems and highlights real and recent examples of how TPLF investors abuse litigation. One example is a dispute involving Burford Capital, one of the largest TPLF firms. Sysco, the food marketer and distributor filed a lawsuit against Burford last year. In a nutshell, Sysco alleged that the litigation funder prevented the company from accepting reasonable settlements in its antitrust litigation, turning the company into a "litigation hostage forced by a greedy funder to keep litigating cases that it [Sysco] wants to resolve." Sysco also accused Boies Schiller, the law firm it hired to handle the antitrust cases, of secretly working with Burford by encouraging the company to continue the lawsuits to increase the amount of money the law firm and Burford could make. Burford then countered-sued Sysco. The research discusses many other examples of the sort where third-party litigation funders were controlling the purse strings for their own benefit.
However, recent years have seen growing scrutiny and calls for courts, legislators, and regulators to take action on TPLF. The research notes that several states in the U.S. have recently enacted laws requiring disclosure and other safeguards in TPLF arrangements, such as in West Virginia, Indiana, and Louisiana, and there is momentum in international jurisdictions to take similar measures as recognition of the scale of the problem becomes more widespread.
ILR continues to advocate for robust reforms to address the issues associated with TPLF and to bring funding out of the shadows. There is a great need for increased transparency and oversight to ensure that the interests of litigants are protected and that the civil justice system is not compromised by third-party funders only motivated by profit.