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Category: Litigation Funding

Litigation Funding Rule Change May Take A While

Litigation Funding Rule Change May Take A While

Don’t hold your breath. That’s one way to summarize the National Law Journal’s summary of the U.S. Chamber of Commerce’s long-term plan to try to rein-in litigation funding via a change to the Federal Rules of Civil Procedure. The piece, entitled Lit Funding Opponents Play Long Game in Bid for Transparency, points out that the federal rules change process is designed to take more than two years – at least. The article is available in full here.  Another recent Secondary…

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A Primer on Champerty and Lawsuit Funding – and Impact on Insurers – Is Part of Report On U.S. Chamber’s Support for Federal Rule Change

A Primer on Champerty and Lawsuit Funding – and Impact on Insurers – Is Part of Report On U.S. Chamber’s Support for Federal Rule Change

What’s champerty?  How does it relate to litigation funding? And why should it matter to the insurance industry? These are a few questions addressed this month in a short but pithy piece in the National Law Review, “U.S. Chamber Seeks New Federal Rule Requiring Disclosure Of Third-Party Litigation Funding Arrangements” (available here). As for the answers: (1) champerty is “an agreement between an officious intermeddler in a lawsuit and a litigation by which the intermeddler helps pursue the litigant’s claim…

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Forbes Reports That Litigation Finance Company Faces Lawsuit By Former Customers Over Allegations of Too-High Interest Rates

Forbes Reports That Litigation Finance Company Faces Lawsuit By Former Customers Over Allegations of Too-High Interest Rates

  Forbes this month reports that a litigation finance company has been sued by former customers, who have alleged that the company charged usurious interest rates.  Says reported John O’Brien in the May 9 article, Customers Sue Legal Finance Company, Allege Interest Rates Over 100%: Six individuals who did business with Oasis [Legal Finance] are suing the company in Georgia, asking for a federal judge to declare the interest rates charged by the company in violation of the lending laws of…

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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,…

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Minnesota Court of Appeals Says State’s Strong Policy Against Champerty Means Litigation Funder Can’t Enforce Forum Selection Clause or Compel Parallel Lawsuit to Proceed in New York

Minnesota Court of Appeals Says State’s Strong Policy Against Champerty Means Litigation Funder Can’t Enforce Forum Selection Clause or Compel Parallel Lawsuit to Proceed in New York

The principles at stake in Maslowski v. Prospect Funding, 890 N.W.2d 756, 2017 Minn. App. LEXIS 26 (Minn. App. Ct. Feb. 13, 2017), can be summed up as follows: A trial court does not abuse its discretion to refuse to enforce a contractual forum-selection clause where the court’s refusal was based on protecting Minnesota’s local interest against champerty; and A trial court does not abuse its discretion by issuing an anti-suit injunction enjoining a litigation funding company from prosecuting a lawsuit…

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Texas Publication Criticizes Litigation Funding’s ‘Incalculable’ Cost to Society: ‘It Used To Be A Crime. Now We Celebrate It?’

Texas Publication Criticizes Litigation Funding’s ‘Incalculable’ Cost to Society: ‘It Used To Be A Crime. Now We Celebrate It?’

The headline sums it up: ‘It Used To Be A Crime.  Now We Celebrate It?”  That’s from the Southeast Texas Record, lamenting the arrival of a litigation funding company, and the erosion of proscriptions against champtery, in an opinion piece that is available in full here.  The writer says that, “[t]he hope of discouraging frivolous lawsuits, protecting the integrity of our judicial system, and keeping unscrupulous lenders from preying on potential plaintiffs seems to have gone by the wayside.”  

Champerty Still Valid Defense in Kentucky, So Litigation Funding Agreements Are Void, Says Court

Champerty Still Valid Defense in Kentucky, So Litigation Funding Agreements Are Void, Says Court

A series of litigation funding agreements were champertous and therefore void under Kentucky law, a federal court has ruled. In Boling v. Prospect Funding Holdings, Civil Action No. 1:14-CV-0008-1-00081-GNS-HBB, 2017 U.S. Dist. LEXIS 48098 (W.D. Ky. Mar. 30, 2017), the federal district court reviewed the claims of an individual who had entered into a series of litigation funding agreements and later challenged the agreements, arguing that they were unenforceable due to Kentucky’s public policy against champerty and prohibition against usury….

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Comments in Law Journal Article Make Connection Between Rule Against Private Investment in Law Firms, Need for Litigation Funders to ‘Tread Carefully’

Comments in Law Journal Article Make Connection Between Rule Against Private Investment in Law Firms, Need for Litigation Funders to ‘Tread Carefully’

The New York Law Journal has reported that a federal appeals court this month “rejected an attempt to loosen restrictions on private investment in the legal industry, dismissing arguments that ethics rules on so-called fee splitting’ impinge on lawyers’ First Amendment rights.” In the article, headlined Second Circuit Upholds Ban on Private Investment in Law Firms, the report also describes a lawyer’s comments about how “restrictions on the legal industry’s access to capital is one of the driving forces behind the…

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National Law Journal Reports on Why Litigation Funding Business Chose Not to Oppose Legislation Requiring Disclosure in Class Actions

National Law Journal Reports on Why Litigation Funding Business Chose Not to Oppose Legislation Requiring Disclosure in Class Actions

A bill approved this week by the House of Representatives would require class action attorneys to disclose to federal courts the fact that a third-party litigation funding company is providing monies for the lawsuit. It’s a bill that has not drawn much, if any, opposition from the litigation funding industry, which has opposed other disclosure requirements. But as the National Law Journal reports, the lack of opposition may be due to a number of reasons, including the fact that class…

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Report: Litigation Funding Is One Reason for Increasing Costs of Australian Insurance Claims

Report: Litigation Funding Is One Reason for Increasing Costs of Australian Insurance Claims

A.M. Best last week posted an interview with Laura Coppola, North American head of management liability for Allianz Global Corporate & Specialty.  In the interview available on A.M Best’s “BestTV” (available here), she said that one reason for increased commercial claims in Australia is the backing of litigation funding companies.  Said Coppola: “One of the culprits that we’ve seen though outside of the U.S., specifically in Australia, is the onset of litigation funders.”  She also said the risk related to litigation funding is “coming…

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