A Market for Justice: A First Empirical Look at Third Party Litigation Funding

University of Pennsylvania Journal of Business Law, Vol. 15, P. 1075, 2013

U of Penn, Inst for Law & Econ Research Paper No. 14-7

36 Pages Posted: 6 Mar 2014 Last revised: 31 May 2017

See all articles by David Abrams

David Abrams

University of Pennsylvania Carey Law School; University of Pennsylvania - The Wharton School

Daniel L. Chen

Directeur de Recherche, Centre National de la Recherche Scientifique, Toulouse School of Economics, Institute for Advanced Study in Toulouse, University of Toulouse Capitole, Toulouse, France

Date Written: 2013

Abstract

The alienability of legal claims holds the promise of increasing access to justice and fostering development of the law. While much theoretical work points to this possibility, no empirical work has investigated the claims, largely due to the rarity of trading in legal claims in modern systems of law. In this paper we take the first step toward empirically testing some of these theoretical claims using data from Australia. We find some evidence that third-party funding corresponds to an increase in litigation and court caseloads. Cases with third-party funders are more prominent than comparable ones. While third-party funding may have effects on both the cases funded and the courts in jurisdictions where it is most heavily used, the overall welfare effects are ambiguous.

Keywords: Litigation rights, trading, contingency fee, legal services market, comparative, foreign law, maintenance and champerty

JEL Classification: K10, K40, K41

Suggested Citation

Abrams, David S. and Chen, Daniel L., A Market for Justice: A First Empirical Look at Third Party Litigation Funding (2013). University of Pennsylvania Journal of Business Law, Vol. 15, P. 1075, 2013, U of Penn, Inst for Law & Econ Research Paper No. 14-7, Available at SSRN: https://ssrn.com/abstract=2404483 or http://dx.doi.org/10.2139/ssrn.2404483

David S. Abrams (Contact Author)

University of Pennsylvania Carey Law School ( email )

3501 Sansom Street
Philadelphia, PA 19104
United States

University of Pennsylvania - The Wharton School ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

Daniel L. Chen

Directeur de Recherche, Centre National de la Recherche Scientifique, Toulouse School of Economics, Institute for Advanced Study in Toulouse, University of Toulouse Capitole, Toulouse, France ( email )

Toulouse School of Economics
1, Esplanade de l'Université
Toulouse, 31080
France

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