Litigation Finance in the Public Square

Abstract

As the market for litigation finance has grown, so has the fight over its propriety. According to its defenders, litigation finance provides access to justice for injured plaintiffs and access to the capital markets for sophisticated businesses. According to its critics, litigation finance extorts vulnerable plaintiffs, facilitates the filing of meritless legal claims, and poses a threat to national security. Like the debates over tort reform that have raged for decades, the debate over litigation finance is pitting the plaintiffs’ bar on one side (with the addition of litigation finance trade associations) against the insurance industry and the defense bar on the other. And like those debates, both sides are taking their arguments to state houses, where they are seeking to secure regulatory regimes favorable to their interests. This Essay explores public sentiment towards litigation finance; describes the activities of interest groups on both sides of the debate; and analyzes the content and partisan valence of the eighteen state laws that currently regulate the practice. 

Keywords: litigation finance, litigation, tort reform, civil procedure, insurance industry