Judging Third-Party Funding
Victoria Shannon Sahani
Washington and Lee University - School of Law
August 22, 2015
UCLA Law Review, Vol. 63, 2016
Third-party funding is an arrangement whereby an outside entity finances the legal representation of a party involved in litigation or arbitration. The outside entity — called a “third-party funder” — could be a bank, hedge fund, insurance company, or some other entity or individual that finances the party’s legal representation in return for a profit. Third-party funding is a controversial, dynamic, and evolving phenomenon. The practice has attracted national headlines and the attention of the Advisory Committee on the Federal Rules of Civil Procedure. The Advisory Committee stated in a recent report that “judges currently have the power to obtain information about third-party funding when it is relevant in a particular case,” but the Committee did not provide any additional guidance regarding how to determine the relevance of third-party funding, what information to obtain, or from whom to obtain that information. This Article provides that needed guidance by setting forth revisions and reinterpretations of procedural rules to provide judges and arbitrators with disclosure requirements and a framework for handling known issues as they arise. By revising and interpreting the procedural rules as suggested in this Article, judges and arbitrators will be able to gain a better sense of the prevalence, structures, and impact of third-party funding and its effects (if any) on dispute resolution procedures. Over time, these observations will reveal the true systemic impact of third-party funding and contribute to developing more robust third-party funding procedural regulations.
Number of Pages in PDF File: 75
Keywords: third-party litigation funding, litigation funding, third-party funding, litigation, procedure, federal rules of civil procedure, arbitration, international arbitration, privileges
JEL Classification: K40, K41, K42, K49, K00, K10, K19, K13, K20, K29
Date posted: August 10, 2014 ; Last revised: August 23, 2015
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