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January 31, 2019

30 General Counsel Urge Transparency for Litigation Funding

Group Refutes Funders’ Claim that Business Community Widely Relies on Practice

By Lisa A. Rickard
President
U.S. Chamber Institute for Legal Reform

As bone-chilling cold grips a large part of the country, a group of 30 general counsel and senior litigators from major U.S. companies gave a cool reception to third party litigation funding (TPLF) in a letter sent today to the Advisory Committee on Civil Rules. The letter supports a petition to the Committee, led by the U.S. Chamber Institute for Legal Reform (ILR) and co-signed by 29 other trade associations, advocating a rule requiring transparency for funding agreements in federal civil lawsuits.

TPLF, where third parties “invest” in lawsuits for a cut of any judgment or settlement, has exploded into a global, multi-billion dollar business. ILR has long warned that the practice is unregulated, can put investors’ interests ahead of plaintiffs’, leads to more lawsuits in our over-sued society, and unnecessarily prolongs litigation. Last year a major funder told The Wall Street Journal, “We make it harder and more expensive to settle cases.”

In today’s letter, the 30 senior litigators state that defendants and courts “have a right to know who has a stake in a lawsuit and to assess whether they are using illegal or unethical means to bring the action.” The group also notes that defendants in litigation must disclose insurance agreements “which some funders have described as a defense-side form of funding.”

The letter also pushes back on a central claim by funders: that the business community supposedly widely uses litigation funding itself. In response, the 30 senior litigators note “no evidence has been proffered to support that assertion,” “nor is it consistent with our experience.”

The next opportunity for the Advisory Committee to take further action on a potential rule requiring transparency for TPLF will be at its meeting in April 2019.

In-house counsel signed onto today’s letter include those from:

  • Allstate
  • AT&T
  • Bayer U.S.
  • BP America Inc.
  • Charles Schwab
  • Chevron
  • Comcast Corporation
  • CVS Health
  • Eli Lily and Company
  • Ford Motor Company
  • General Electric
  • GlaxoSmithKline LLC
  • Google
  • Home Depot
  • Honeywell
  • ITT Inc.
  • Johnson & Johnson
  • Liberty Mutual Insurance
  • MassMututal
  • Merck & Co., Inc.
  • Microsoft
  • Phillips66
  • RiverStone Group
  • RPM International, Inc.
  • Shell Oil Company
  • State Farm Mutual Automobile Insurance Company
  • Verizon Wireless
  • Westfield
  • Zurich North America


Letters, Comments, Petitions Amending Rule 16(c)(2) to Prompt Judges to Consider Inquiring About Financial Interests Created by Third Party Litigation Funding Third Party Litigation Funding (TPLF) Gavel and Union Jack Blog UK Class Actions Are on the Rise, Thanks to Litigation Funding International Initiatives, Third Party Litigation Funding (TPLF) Delaware General Assembly Blog Delaware Wants to Take a Closer Look at the TPLF Industry   Third Party Litigation Funding (TPLF) Blog European Parliament Legal Affairs Committee Adopts TPLF Legislative Initiative Report International Initiatives, Third Party Litigation Funding (TPLF) Welcome to Delaware Sign Blog Another Federal Court Now Requires Disclosure of Third Party Litigation Funding Third Party Litigation Funding (TPLF)

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