Modeling the Likely Effects of Litigation Financing

52 Pages Posted: 16 Oct 2015 Last revised: 2 Oct 2016

Jeremy Kidd

Mercer University - Walter F. George School of Law

Date Written: October 14, 2015

Abstract

The arguments for and against third-party litigation financing are based on incorrect assumptions regarding the impacts on total litigation. A formal model incorporating the choices of plaintiff, lawyer, and financier shows only minimal impact on total litigation, largely positive. However, after addressing the potential for long-term, strategic behavior by financiers, it is obvious that some dangers remain. Divorced from the dramatic claims of proponents and opponents, litigation financing is merely a tool that can be used for good or bad, and differentiating by types of claims and the incentives of the parties allows that tool to be appropriately used.

Keywords: tort reform, frivolous litigation, public choice, rent-seeking

JEL Classification: D70, D72, K13,

Suggested Citation

Kidd, Jeremy, Modeling the Likely Effects of Litigation Financing (October 14, 2015). Loyola University Chicago Law Journal, Vol. 47, No. 4, 2016. Available at SSRN: https://ssrn.com/abstract=2674252

Jeremy Kidd (Contact Author)

Mercer University - Walter F. George School of Law ( email )

1021 Georgia Ave
Macon, GA 31207-0001
United States

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