Litigation Finance Transparency is On the Rise
The regulations surrounding the practice of third-party legal funding are ever-changing. As the practice becomes more popular as a product and an investment—interest in legislating litigation funding grows. Recently, Roy Strom discussed what we can expect in the coming months. Bloomberg Law business columnist Roy Strom details his early experiences as a journalist covering Litigation Finance. After learning of the practice from a New York Times piece, Strom found a local startup that was starting its own funding practice. That group eventually became the powerhouse funder, Longford Capital. Strom advised funders to advertise their offerings and let the public know that funding is an option. He found that neither funders nor the legal firms that utilize them wanted to talk openly about their business practices. So while third-party funding is a net gain for society, the shroud of secrecy invites suspicion. Dai Wai Chin Feman, Parabellum Capital’s director of commercial litigation strategies, explains that in jurisdictions that have clear rules regarding funding, funders and legal teams are more comfortable discussing their relationship. A perfect example is the Willkie-Longford pact, in which Longford Capital struck a deal with Willkie, Farr & Gallagher to fund about $50 million in cases. Laws surrounding disclosure vary from one jurisdiction to another, and no lawyer wants to invite court interference into a funding agreement unnecessarily. Rule changes like New Jersey’s new disclosure requirements might actually be helpful for third-party funding—in that it invites greater transparency into the process, though opinions vary widely. Litigation funding can be beneficial to clients, legal teams, and justice itself. It seems counterproductive to be anything less than transparent.
