The U.S. Chamber Institute for Legal Reform (ILR) has released a report on third-party litigation funding (TPLF). It asserts that TPLF operates with little transparency and often at the expense of those its mission is to help.
According to an ILR press release, the report, titled "Grim Realities: Debunking Myths in Third-Party Litigation Funding (TPLF)," examines the multi-billion-dollar TPLF industry. It reveals that due to a lack of transparency, funders often make agreements directly with lawyers, unbeknownst to the courts and the opposing parties.
According to the press release, because the courts and opposing parties don’t know about a funder’s involvement in a case, serious problems arise. ILR argues in the report that the main goal of litigation funders is to maximize their own profits. They also tend to influence the litigation process, from strategic decisions to settlement negotiations, sometimes going against the parties’ interests. The report also points to concern over foreign adversaries using TPLF to undermine U.S. national security and economic interests by funding litigation against U.S. companies.
The paper calls into question the TPLF industry’s claim that it is a positive influence on civil justice systems. It provides recent examples of how TPLF investors abuse litigation. However, it also looks at increasing scrutiny and pressure on courts, legislators, and regulators to take action on TPLF.
"The research notes that several states in the U.S. have recently enacted laws requiring disclosure and other safeguards in TPLF arrangements, such as in West Virginia, Indiana, and Louisiana, and there is momentum in international jurisdictions to take similar measures as recognition of the scale of the problem becomes more widespread," ILR said in the press release.
According to ILR’s website, as part of the U.S Chamber of Commerce, ILR advocates for a fair legal system that promotes economic growth and opportunity. It is based in Washington, D.C.