Wall Street Journal Says Court Rules Are Starting to Bring Litigation Funders Out from Under a ‘Veil of Secrecy’

Wall Street Journal Says Court Rules Are Starting to Bring Litigation Funders Out from Under a ‘Veil of Secrecy’

“Investors placing bets on commercial lawsuits have long operated under a veil of secrecy.  But as litigation funding in the U.S. has spread to more courthouses and transformed into a billion-dollar business, plaintiffs and their faceless financiers are confronting calls for more transparency.”

So begins a news article, “Lawsuit Funding, Long Hidden In The Shadows, Faces Calls For More Sunlight“, that the Wall Street Journal published last week.

The article points out that “the arm of the federal judiciary that oversees procedural rules recently decided to examine whether the court system should require all civil litigants to reveal financing deals with outsiders who have wagered on legal outcomes” and that the Senate Judiciary Committee also is considering legislation that would force class-action plaintiffs to reveal deals with litigation funders.

“[M]ost of the time, a funder’s role in a lawsuit is kept secret from opposing parties,” according to the article, which also describes how the U.S. Chamber of Commerce supports rules and legislation requiring disclosure, because “secrecy enables outside investors to conceal their influence over a lawsuit and settlement decisions, while blinding courts to potential financial conflicts of interest.”

An investment officer admits that litigation funding “makes it harder” for parties to agree to settle lawsuits.

The article, by reported Jacob Gershman, is available here.

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