A Comparative Analysis of Third-Party Litigation Funding in the United States and the United Kingdom
Document Type
Article
Publication Date
2024
Abstract
Third-Party Litigation Funding (TPLF), which is also known as litigation finance, involves a financial arrangement in which a third party provides funding to support the plaintiff's pursuit of a civil lawsuit. The third party, in return, receives a portion of the proceeds if the litigation is successful. Like a contingent fee agreement, this type funding model enables a party to bring a lawsuit even if it does not have the resources to pay the up-front costs of the litigation. The important difference is that the litigation funder is not counsel to a party in the case, and that TPLF essentially creates a secondary market for litigation funding. Thus, hedge funds, banks, insurance companies, and other outside investors are providing funding for the attorneys and parties in the underlying case. It is likely that TPLF has both potential costs and benefits. The most apparent benefits include providing access to justice for parties and lawyers who lack economic resources, as well as spreading the risk of bringing (or possibly defending) litigation and improving the level of information about potential claims. Drawbacks include a variety of ethical issues, as well as the potential for an increase in the amount of litigation.
Recommended Citation
Gary Myers,
A Comparative Analysis of Third-Party Litigation Funding in the United States and the United KingdomUniversity of Missouri School of Law Legal Studies Research Paper No. 2024-39
(2024).
Available at: https://scholarship.law.missouri.edu/facpubs/1335