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Category: Litigation Funding

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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Legislation Would Require Disclosure of Litigation Funders in Class Action Matters

Legislation Would Require Disclosure of Litigation Funders in Class Action Matters

Earlier this month, a bill entitled the Fairness in Class Action Litigation Act of 2017 (H.R. 985) was introduced in Congress.  The bill is aimed at reforming federal class actions in many ways.  One of those ways would require that class counsel disclose third-party litigation funding. The [Fairness in Class Action Litigation] Act would require class counsel to promptly disclose to the court and all other parties the identity of any third party, other than a class member or counsel of record, who has…

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Federal Court Decides That Litigation Funders Can ‘Stay In The Shadows’

Federal Court Decides That Litigation Funders Can ‘Stay In The Shadows’

Litigation funding companies “can continue their work almost entirely in secret” in the United States District Court for the Northern District of California, which this week “rejected a proposed rule change that would have required attorneys to disclose when their cases receive backing from third parties,” the San Francisco Chronicle reported yesterday. The court had considered adopting a rule change for cases brought in the district that would have – for the first time in U.S. courts – required litigants to…

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Litigation Funding Arrangement Gave Company Too Much Control, Violated North Carolina’s Public Policy Against Champerty, Says Court

Litigation Funding Arrangement Gave Company Too Much Control, Violated North Carolina’s Public Policy Against Champerty, Says Court

A federal court judge last week refused to approve a litigation financing arrangement because it was champertous. The court in In Re DesignLine Corp., Case No. 13-31943/Case No. 13-91944, 2017 Bankr. LEXIS 182 (Bankr. W.D.N.C. Jan. 20, 2017), said that a bankruptcy trustee’s arrangement with a litigation funding company violated North Carolina’s public policy against champerty because of the control that the funding company had over the litigation. The case involved a litigation trust that sued former officers and directors…

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News Report: Litigation Funders’ Lawsuit Says New York AG’s Attempt to Recoup Fees Paid by 9/11 Victims Would Hurt Business

News Report: Litigation Funders’ Lawsuit Says New York AG’s Attempt to Recoup Fees Paid by 9/11 Victims Would Hurt Business

The New York Post this week reported that a litigation funding company has filed a lawsuit against New York’s Attorney General over his “attempt to recoup $1.6 million in ‘excessive’ fees paid by 9/11 victims for cash advances on government payments.” The report (9/11 Fee Lawsuit) also says that RD Legal Funding Partners’ lawsuit against New York Attorney General Eric Schneiderman alleged that “the AG’s demand will have a ‘profoundly adverse, chilling effect’ on litigation funding.”   An earlier Post story about RD Legal…

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Wall Street Journal Describes Litigation Funding Situation Involving Investor Lawsuit Against Fund

Wall Street Journal Describes Litigation Funding Situation Involving Investor Lawsuit Against Fund

The Wall Street Journal this week, reporting on an lawsuit against a private equity fund that is being financed in part by a major investor in the fund, described some of the issues relating to litigation funding schemes. A major Dutch investor lost $60 million when a Carlyle Group LP fund collapsed in March 2008. Now, he is paying for others to sue the U.S. private-equity firm, a high-stakes gamble that could make him hundreds of millions of dollars. Louis…

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Ruling from Court in United Kingdom Expands Liability for Litigation Funders

Ruling from Court in United Kingdom Expands Liability for Litigation Funders

American Lawyer last week reports that “a rare court ruling on the liability of litigation funders” from the English Court of Appeal “increases the exposure of funders in U.K. cases that don’t succeed.” The report added that “While the ruling will not affect litigation funding arrangements for U.S. cases, it does reveal details of the underlying funding agreements, which are typically cloaked in secrecy.” Added the report: the “litigation funding industry filed amicus briefs arguing that funders should not be on the hook for…

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