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The Second Circuit has upheld a $4.8 million attorneys' fee award in a sex trafficking case, endorsing a district court's decision to strike time counsel spent communicating with its litigation funder.

In Moore v. Rubin, decided on September 4, a panel of Chief Judge Lohier and Judges Parker and Chin affirmed the award to six plaintiffs who won a $3.85 million jury verdict against former bond trader Howard Rubin under the Trafficking Victims Protection Act. In rejecting the argument that too many timekeepers had been compensated, the panel noted approvingly that the district court had applied a 15% across-the-board reduction and excluded non-compensable tasks, "such as communications with counsel's litigation funder."

The more consequential ruling for funders came below. In February 2025, Judge Brian Cogan of the Eastern District of New York refused to shift roughly $1.84 million in principal and interest owed to a third-party funder, reasoning that how a lawyer finances a practice is irrelevant to the client and the defendant alike. "Whether it is a bank loan, family loan, personal assets, or a litigation funder," he wrote, "it is overhead."

Judge Cogan also declined to follow the English decision in Essar Oilfield Services v. Norscot Rig Management, which allowed recovery of funding costs, observing that neither the statute nor the local rule hints at such recovery.

The funding cost denial was not before the appellate panel, as Rubin appealed only the fee award. The funder, Pravati Investment Fund IV, later sought unsuccessfully to intervene to protect its interest in the fees after the plaintiffs' firm dissolved.

Litigation funder Legalist has asked a federal court in Manhattan to confirm an arbitration award against a claimant it financed, in a rare public dispute between a funder and the plaintiff whose case it paid for.

As reported by Bloomberg Law, Legalist filed its petition on September 8 in the Southern District of New York, seeking to confirm a partial final award of $108,718.45 against Mario Rinaldi. The award, issued on May 18 by JAMS arbitrator the Hon. Elaine Rushing (Ret.), consists of $105,218.45 in attorneys' fees and $3,500 in arbitration costs.

The funding agreement dates to June 2018 and financed Rinaldi's suit against two French champagne producers, which he brought after working to build their brand in New York. A jury returned a $1.5 million verdict in his favor in March 2022, and final judgment with prejudgment interest was entered that December at $2,318,506.85. That judgment has not been collected. Rinaldi told Bloomberg Law he is still pursuing the money with his own resources, having retained French counsel to enforce it abroad.

Legalist alleges in its filing that Rinaldi breached the funding agreement by refusing to cooperate in collection efforts, including by declining to permit communication with his French counsel. According to the memorandum, Rinaldi did not appear in the arbitration at any stage, and has not moved to vacate or modify the award.

The arbitration was held open for Legalist to pursue further relief, indicating the $108,718.45 may not represent the full extent of its claim. No response from Rinaldi appears in the most recent public docket entries.

Sorren, a private equity-backed accounting and advisory group, has launched an affiliated US law firm under a management services structure — the latest sign of outside capital moving toward legal services through arrangements that sit outside direct law firm ownership.

As reported by Lawyer Monthly, Sorren Law has been established from Mansfield & Mayo, an existing law firm operating in Nevada and Idaho. The practice covers corporate and business law, mergers and acquisitions, commercial transactions, estate planning, asset protection, tax planning, and litigation and dispute resolution. It is led by attorneys Patrick Mansfield and Massey Mayo.

The structure separates the regulated practice from its commercial infrastructure. Sorren Law is a separately regulated, lawyer-owned law firm, while Sorren Legal Support operates as a management services organisation subsidiary providing administrative and operational support under a management-services agreement. "Sorren and lawyers at Sorren Law are co-invested in the management-services organisation," chief executive Josh Tyree said.

Sorren itself was formed in 2025 through the combination of 13 accounting firms and now employs more than 1,000 people. It is backed by private equity firm DFW Capital Partners, although that investment relationship does not extend to the legal practice.

The launch illustrates how the MSO model is being used to route outside capital toward legal work while preserving lawyer ownership of the firm itself. That same structure is now drawing legislative attention in California, Illinois and Colorado, where lawmakers have moved to restrict the influence outside investors can exert over case decisions.

Days after Governor Gavin Newsom signed Assembly Bill 2305, California's leading civil justice reform group has dismissed the new law as effectively unenforceable — while noting that third-party litigation funding itself remains untouched by it.

As reported by The Center Square, the Civil Justice Association of California said the measure, signed on September 20, will change little in practice. "Unfortunately, this bill is a paper tiger," the group said. "Its weak enforcement mechanism will do little to deter bad actors or prevent outside investors from influencing lawsuits."

CJAC's central objection is the enforcement channel. "Putting the State Bar in charge of policing this conduct is like asking mall cops to take down organized crime," the group said, adding that "the bad conduct is likely to continue. Billboard lawyers and their hidden financial backers will keep gaming our courts, while victims, taxpayers and employers pay the price."

AB 2305 bars private equity firms, hedge funds and corporate legal funders from interfering with an attorney's professional judgment in client representation, court proceedings, trials or settlement negotiations. It carries statutory damages of $10,000 per violation against both the lawyer and the investor, or three times actual damages, whichever is greater.

Critically for the funding industry, the law leaves third-party litigation finance in place. Firms may continue securing loans from equity groups and investors to fund lawsuits, though those funds cannot be used for advertising or recruiting clients. Alternative business structures and management services organizations may still handle general business operations and back-office management.

A new empirical review of third-party funding disclosure disputes in the federal courts concludes that judges are already applying case-specific standards, and that no court has ever imposed the blanket disclosure regime now under consideration by federal rulemakers.

As reported by The National Law Review, the analysis, authored by Dai Wai Chin Feman for the International Legal Finance Association, examined more than 475 actions involving confirmed funding, suspected funding or contested disclosure motions. From that pool the study identified 163 court orders resolving disclosure motions, drawn from 153 distinct cases.

The headline finding is that courts denied 89 of those motions and granted some form of disclosure in 74. Only 19 orders — 12% of the total — resulted in production of a funding agreement to an opposing party.

Disclosure grants cluster heavily in two practice areas. Intellectual property cases account for 33 of the 74 grants, or 45%, while intellectual property and personal injury/tort matters together account for 48, or 65%.

The study lands in the middle of the pending proposal from the U.S. Chamber of Commerce's Institute for Legal Reform and Lawyers for Civil Justice to amend Rule 26(a)(1)(A) so that funding agreements are produced automatically in every civil case absent entry of a protective order. The authors argue the data undercuts that approach, concluding that "no court has ever ordered what ILR and LCJ's proposed rule would make automatic," and favouring a case-specific alternative instead.

A new opinion piece argues that legal system abuse, including the rapid expansion of third-party litigation funding, is an overlooked driver of household costs, and calls for federal transparency measures targeting outside investors in litigation.

As reported by the Washington Reporter, Jenn Pellegrino, founder of Defend Forgotten America Action, writes that staged crashes, billboard advertising that omits how attorneys' fees, litigation funders and medical liens consume settlements, and unnecessary medical treatment combine to push costs onto businesses, insurers and ultimately consumers through higher prices and suppressed wages. She argues small businesses absorb the effects most acutely.

Pellegrino singles out third-party litigation funding as "one particularly troubling trend," pointing to the involvement of outside investors, including foreign governments and sovereign wealth funds, and the limited visibility courts and defendants have into who is financing a suit, what influence investors hold, and how recoveries are divided. The civil justice system, she writes, "should not become another financial marketplace where investors place bets on the outcome of lawsuits."

The piece points to state-level disclosure reforms already enacted and to two federal proposals. The Protecting Our Courts from Foreign Manipulation Act would require disclosure of foreign litigation funding and bar foreign governments and sovereign wealth funds from investing in U.S. litigation. The Tackling Predatory Litigation Funding Act would impose a higher tax rate on profits earned by outside investors in litigation.

The op-ed reflects a broader effort by funding critics to recast disclosure legislation as consumer economics rather than a narrow procedural debate.

Third-party litigation funding in India remains small but is attracting institutional capital, with domestic and foreign funders building portfolios in a market that still has no central statute, regulator or disclosure requirement.

As reported by Business Standard, active participants include Five Rivers, LegalPay and Singapore-based ELF Partners, while the government examines whether litigation funding can be deployed for insolvency-related claims. The economics are familiar: a claimant with a ₹100 crore claim that would cost ₹5 crore to pursue can transfer that cost to a funder on a non-recourse basis, repaying only from recoveries.

The legal foundation rests on case law rather than legislation. Sameer Jain, managing partner at PSL Advocates & Solicitors, noted that the Supreme Court's 2018 ruling in Bar Council of India v A.K. Balaji held that lawyers cannot fund their own clients but did not bar anyone else, while Maharashtra, Gujarat and Uttar Pradesh amended the Code of Civil Procedure to recognise financiers. In Tomorrow Sales Agency v SBS Holdings, the Delhi High Court declined to treat a funder as a party to arbitration and held that an award could not be enforced against a non-party funder, while stressing that funding should be transparent and not exploitative.

The Ministry of Corporate Affairs' Insolvency Law Committee likewise found no legal bar. Neeha Nagpal, founding partner at NM Law Chambers, described the market as unregulated by statute but governed by contract and precedent, and pointed to voluntary self-regulation through industry bodies as an interim step toward a balanced regime.

The share of UK law firms willing to consider outside investment has climbed sharply, according to NatWest's annual legal sector report, with 40% now saying they would actively explore some form of third-party capital.

As reported by Legal Futures, the report analysed 112 law firms with turnover between £1 million and £250 million and a median of £23 million. The 40% figure is up from 29% two years ago. Firms cited growth plans most often, followed by succession management, technology investment and what the report described as opportunistic windfall realisation.

Competition from private equity-backed firms is a growing pressure point. A third of respondents named competition for talent as the most significant challenge posed by PE-backed rivals, while 24% pointed to increased business investment costs. The report, authored by Andrew Allen, partner and head of PKF Francis Clark's national legal sector team, found firms are "pushed to accelerate investment in infrastructure… to compete with externally funded firms which often have the budgets to invest quickly and boldly," while externally funded firms "are seeking to rapidly gain market share which in turn places pressures on work pricing."

Interest on client money has become a meaningful earnings line, at a median 3.7% of earned income and 14% of profit per equity partner, down from 5.6% and 21% respectively. On Ministry of Justice proposals to divert that interest, 29% predicted legal price inflation and 11% forecast firm failures. Allen warned removal would drive significant fee inflation and "most probably the demise of notable volumes of law firms."