Commentary: Litigation Funders Are Fighting To ‘Stay In The Shadows’

Commentary: Litigation Funders Are Fighting To ‘Stay In The Shadows’

How much control do litigation funding companies have over the lawsuits they invest in?

Litigation funders say ” ‘none,’ but the real answer is ‘we really don’t know.'”

So writes Lisa A. Rickard, President of the U.S. Chamber of Commerce’s Institute for Legal Reform in a commentary that appeared yesterday in the New York Law Journal.

In the piece, entitled Third-Party Litigation Funders Fight Hard To Stay In The Shadows, Rickard says that “the third-party litigation finance industry must be getting rattled by calls for greater transparency” given a recent op-ed from the managing director of one of largest lawsuit funders.

She wrote that two different proposals “would require the disclosure of third-party litigation funding agreements to the court and all parties of the litigation at the outset of a lawsuit” – one proposal is the federal Litigation Funding Transparency Act, and the other is a proposed federal rule being considered by the federal judiciary’s Advisory Committee on Civil Rules.

“It’s not unreasonable to assume that the hedge funds and others who finance commercial litigation treat these investments like any other and demand some measure of control over them,” she wrote.

Concludes Rickard: “There is no reason to keep these agreements shielded from scrutiny.”

The commentary is available here.

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