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June 4, 2018

“Who’s Behind the Curtain?”: Rise of Third Party Litigation Funding

In a Des Moines Register op-ed, U.S. Chamber Institute for Legal Reform President Lisa A. Rickard said it is “vital that Congress recognizes the need for oversight of” third party litigation funding, “which undermines fairness and ethical practice in our courts.”

Third party litigation funding, Rickard says, “leads to more lawsuits, undercuts plaintiffs’ control of a case, and unnecessarily prolongs litigation.” She also said that plaintiffs’ lawyers may cede control over litigation to the funder and even “reject realistic settlement offers because they need more money to pay funders back.” Rickard points directly to the Litigation Funding Transparency Act, introduced by Sen. Chuck Grassley (R-IA), as a solution.

The bill would “restore fairness” by requiring plaintiffs’ lawyers to disclose outside funding arrangements in federal class actions and multi-district litigation. The bill would also “shine a much-needed spotlight” on lawsuit lending, a practice in which plaintiffs are offered advance cash loans that often come with sky-high interest rates. The New York Times and New York Post have both recently run exposés detailing abuses by lawsuit lenders.

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