Commentary: Litigation Funding Arrangements May Open Doors for Defense Teams to Use Targeted ‘Strategic Discovery’ in Litigation

Commentary: Litigation Funding Arrangements May Open Doors for Defense Teams to Use Targeted ‘Strategic Discovery’ in Litigation

In an employment law blog post, a labor litigator says that litigation funding may create opportunities for employer-defendants to use “strategic discovery” in the litigation strategies.  Among the suggestions:

  • A defendant “may request that the Case Management Order require the plaintiff to disclose any third-party litigation funding” as per Federal Rule of Civil Procedure 26(f)(3)(F).
  • If a litigation funding arrangement is uncovered, the defendant could leverage that fact “to reduce litigation costs and gain strategic advantages” based on, among other things, the rule that provides that the “‘parties’ resources’ is one factor in defining the scope of discovery” (see Fed. R. Civ. P. 26(b)(1)) and that a plaintiff’s resources now could “fairly include any available third-party litigation funding.”
  • A litigation funder also “may erode a plaintiff’s claimed inability to pay for requested discovery” (see Fed. R. Civ. P. 26(c)(1)(B)).
  • In addition, a litigation funder that “plays role in litigation misconduct may be subject to sanctions” (see Fed. R. Civ. P. 37(a)(5)(A)).

The blog post, Strategic Discovery Of Third-Party Litigation Funding In Class and Collective Actions by Stan Hill, is available in full here.

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