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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

David Abrams

University of Pennsylvania Law School

Daniel L. Chen

Toulouse School of Economics / Institute for Advanced Study / University of Toulouse; LWP, Harvard Law School, Harvard University

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 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 Law School ( email )

3501 Sansom Street
Philadelphia, PA 19104
United States

Daniel L. Chen

Toulouse School of Economics / Institute for Advanced Study / University of Toulouse ( email )

21 allée de Brienne
31015 Toulouse cedex 6 France
Toulouse, 31015
France

LWP, Harvard Law School, Harvard University ( email )

8 Mt. Auburn St., 1st Floor
Cambridge, MA 02138
United States

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