Transparency in litigation finance is a hot topic. Many are pushing for more disclosure regarding the identity of who is funding litigation.
In June court officials proposed amendments to an existing rule which deals with the disclosure of interested parties in a case. They suggested adding funders to this list. However, on the 23rd of January, the court decided disclosure is only necessary in class-action cases.
It is unlikely this will have a huge impact on funders. Litigation funders rarely back class-action suits given the risks associated with this asset. The increased complexity given the number of parties involved is usually a deterrent.
“For us and for our business, it will have a very little effect…We’re pleased to see the court taking an incremental approach on this”
– Travis Lenkner, a managing director with the international litigation finance firm Burford Capital.
28% of private-practice lawyers in the U.S. said their firms used litigation finance in 2016. The data comes from a survey conducted by Burford. That’s four times as much as in 2013.
The industry has faced criticism. Many obsessed with the idea that it supports frivolous or spurious litigation. However, it is crucial for firms to pick cases that have merit. Without this, they risk losing the case and substantial amounts of their fund’s money.
Access to justice is the most important element of litigation funding. With rising costs, many see this industry as provided a service for social good.
“You talk to a business owner or a patent holder whose life has been destroyed by someone and they can’t afford to fight back. That’s where we come in…You meet with people whose cases you’ve funded, and you realize that it’s a social good to allow people to use our super-expensive judicial system.”
– Matthew Harrison, an investment manager and legal counsel in San Francisco for litigation funding firm Bentham IMF.