Report of the National Expert for the United States in Mapping Third Party Litigation Funding In The European Union

Commercial third-party litigation funding (“TPLF”) is not centrally regulated in the United States. It is subject to the overlapping jurisdiction of state and federal courts, state and federal legislatures, regulatory agencies, and bar associations. Legislation, regulation, and oversight of TPLF is being undertaken at each of those levels – much of it centered around the questions of when and whether TPLF should be disclosed; how to mitigate conflicts of interest created by TPLF (including the potential for claimants to lose control over their case to funders); and the identification of any foreign individuals, entities, or countries that may be providing the funding. At least 12 state legislatures and the U.S. Congress have passed or considered TPLF legislation. Many federal and state courts have issued standing orders regarding litigation finance. In TPLF cases, courts have used their inherent powers to investigate potential abuse of process and to determine whether those appearing before the court are the real parties in interest.

TPLF is used in most types of civil litigation, perhaps most commonly in contract disputes, intellectual property, class and mass actions, and mass tort claims. There are many third-party litigation funders in the U.S., including specialized litigation funders as well as other institutional (and occasionally individual) investors. There are no countrywide disclosure or reporting requirements for TPLF; to the contrary, most deals are confidential and only become known if a dispute arises. Because of that, there is no comprehensive, reliable dataset regarding TPLF.

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