Abstract

http://ssrn.com/abstract=2291298
 


 



Litigation Finance: What Do Judges Need to Know?


Bert I. Huang


Columbia Law School; Harvard Law School

July 1, 2012

Columbia Journal of Law and Social Problems 45:525 (2012)
Columbia Law and Economics Working Paper No. 451
Columbia Public Law Research Paper No. 13-362

Abstract:     
The growth of “litigation finance” — the funding of lawsuits by outside investors who are neither parties nor counsel — is being closely watched by academics, the press, and the bar. The practice poses risks of conflicting interests and improper influence; and yet if carefully managed it may in fact enhance party autonomy. What questions, then, should judges be asking when dealing with a case with outside funding?

This symposium essay offers judges a starting point: a menu of questions to ask parties who receive such financing. These inquiries aim to pierce simplistic labels such as “loan” or “investment,” in order to help judges grasp the true nature of the funder’s stake, incentives, and control. For instance: Is the investor taking interest payments, a share of the recovery, or both? Does the investor’s return depend on whether the outcome is a judgment or a settlement? Or on whether the remedy is injunctive or monetary? Has the investor in effect chosen the party’s counsel? Can it exert de facto influence over litigation decisions by threatening to withdraw funding? Does the arrangement limit investments by other funders? How does it affect the amount or timing of the party’s or counsel’s compensation?

Further questions are raised here to prompt judges to consider new ways not only to uncover, but also to respond to — or even to harness — such third-party involvement. Special emphasis is given to the context of mass litigation. For instance: Should opposing counsel be allowed to pose questions about the financing? Should the court direct that financing details be included in motions for class certification and in notices to class members? How might the court take the funding structure into account in assigning attorneys’ fees, say, or in approving settlements?

Number of Pages in PDF File: 14

Keywords: Alternative litigation financing, third-party funding, judges, judicial practice, civil procedure, class actions

Accepted Paper Series


Download This Paper

Date posted: July 9, 2013 ; Last revised: September 28, 2013

Suggested Citation

Huang, Bert I., Litigation Finance: What Do Judges Need to Know? (July 1, 2012). Columbia Journal of Law and Social Problems 45:525 (2012); Columbia Law and Economics Working Paper No. 451; Columbia Public Law Research Paper No. 13-362. Available at SSRN: http://ssrn.com/abstract=2291298

Contact Information

Bert I. Huang (Contact Author)
Columbia Law School ( email )
435 West 116th Street
New York, NY 10025
United States
HOME PAGE: http://www.law.columbia.edu/fac/Bert_Huang
Harvard Law School ( email )
Cambridge, MA 02138
United States
HOME PAGE: http://www.law.harvard.edu//faculty/directory/11277/Huang/
Feedback to SSRN


Paper statistics
Abstract Views: 965
Downloads: 167
Download Rank: 103,861

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo4 in 0.391 seconds