Alternative Litigation Financing in the United States
RAND occasional paper; the early survey of the US market.
Summary
The reference has not verified this book in detail; the summary states only what the title, author and subject establish.
Garber wrote this for the RAND Institute for Civil Justice as a research assessment of third-party litigation funding in the United States. The reference has not verified the report's detailed contents.
The subject is the practice by which a party unconnected to a lawsuit provides money to a claimant or a law firm in exchange for a share of any recovery. The report distinguishes the segments that existed at the time: consumer legal funding, meaning advances to individual plaintiffs against personal injury claims, typically small and priced at high effective rates; funding provided to law firms against portfolios of contingency cases; and commercial litigation funding, meaning investment in large business disputes, which was then a newer and smaller segment.
The analytical questions such an assessment addresses include the effect on access to justice, since funding permits claims that could not otherwise be brought; the effect on the volume and composition of litigation, which is the concern raised by defendant interests; the effect on settlement behaviour, since a funded claimant can refuse an early offer; the legal doctrines of champerty and maintenance which historically prohibited the practice and which survive unevenly across states; disclosure obligations and whether opposing parties and courts should know that funding exists; and the ethical questions about control of the litigation, since the funder's interest and the claimant's may diverge.
The industry has grown very substantially since 2010, with large dedicated funds, publicly listed funders, and continuing disputes over disclosure requirements in federal courts. Readers should treat this as a research baseline from the sector's early period and verify the current legal and market position.
Key takeaways 7
- Third-party litigation funding provides capital to claimants or law firms in exchange for a share of any recovery.
- Consumer legal funding advances small sums against personal injury claims at effective rates far above conventional lending.
- Commercial litigation funding invests in large business disputes and was a newer and smaller segment at the time of the report.
- Funding permits claims that would not otherwise be brought, which is both the access to justice argument and the concern about litigation volume.
- A funded claimant can refuse early settlement offers, which changes the bargaining position independently of the claim's merit.
- Champerty and maintenance doctrines historically prohibited the practice and survive unevenly across American states.
- Whether funding arrangements must be disclosed to opposing parties and to courts remains contested.
Who should read it
Investors and lawyers considering litigation finance who want a research baseline on the sector's structure, verified against current law and market practice.
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Where it sits in the reference 1
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