In recent years, the emergence of third-party litigation funding has created a notable paradigm shift in the litigation landscape. Third-party litigation funding involves external entities (hedge funds, etc.) financing legal actions, primarily on behalf of Plaintiffs, in exchange for a percentage of the recovery if the case is successful. In essence, these entities are betting on lawsuits.
Proponents argue that this practice is a driving force for change, breaking down financial barriers for individuals who may lack the means to pursue legal action independently. This levels the playing field, empowering individuals to seek legal recourse for grievances they might otherwise be unable to address or enabling smaller entities to take on larger opponents.
Critics express concerns about the lack of transparency and potential ethical implications, suggesting that it might encourage frivolous litigation, compromise the attorney-client relationship as financial interests become more entwined with legal strategy, or even be a predatory practice.
The long-term effects of third-party litigation funding on legal strategies, settlement negotiations, and the overall dynamics of litigation remain to be seen.
At Waranch & Brown, we are actively seeking information regarding third-party litigation funding in discovery, and ensuring we understand its potential implications in every case we defend. If you need assistance with your case or would like to discuss potential defense strategies, we are here to help.