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ESG and Litigation Funding

ESG and Litigation Funding

Are ESG initiatives and regulations creating more tension between companies and their suppliers? Are we seeing an uptick in disputes that are arising out of ESG initiative and regulations? What impacts and pressures are ESG matters having on companies, funders, attorneys and governments? These topics and more were covered on IMN’s panel discussion “ESG Initiatives: Challenges and Opportunities.” Panelists included Viren Mascarenhas, Partner at Milbank, Nikos Asimakopoulos, Director of Disputes at Alaco, and Rebecca Berrebi, Founder and CEO of Avenue 33, LLC. The panel was moderated by Collin Cox, Partner at Gibson Dunn. Rebecca Berrebi began the discussion by noting that ESG is a huge space. Even with firms concerned about ‘green-washing,’ and not classifying every type of investment as ESG, the space is still enormous. One area she sees a strong ESG connection with is whistleblower claims—she has seen bundles of SEC whistleblower claims get underwritten by funders, despite the fact that the case type is a bit of a black box with limited visibility into the details of the case. Yet funders are pursuing these types of claims, which have a strong ESG component. Collin Cox noted how particular these types of cases are, which must make the diligence extremely difficult. Berrebi concurred, explaining she has seen cases where the whistleblower is actively involved, which of course is a huge help, but otherwise there is a large diligence hurdle to overcome. The flipside is that these are not expensive cases, and when bundled, can become a worthwhile investment. Viren Mascarenhas highlighted the arbitration space. On the commercial front, he noted that he is getting calls from corporate partners, and there is concern about how to address the human rights principles of the U.N., which are becoming more popular with the public-private partnerships on offer. On the investor-state front, issues are arising in investor treaties which have carve-outs, or provisions where parties must comply with national laws and with U.N. principles. These are examples where an ESG focus is having an impact. Nikos Asimakopoulos spoke to obscure issues such as claims against foreign supply chain operators. He has a claim in an African state, where the claimant must demonstrate that the government behaved improperly. This is very difficult, of course. You must go to the specific locale and investigate the exact regulations in place at a local level, because this is what is driving the decision making. Zooming out, the theme of this panel seemed to be how ESG clearly affords opportunities to litigation funders, but is not a panacea. The emerging sector also presents diligence challenges and confusion around how multinational ESG initiatives might impact state and local laws. So right now we appear to be in a gray area where there is much uncertainty around the intersection of ESG and litigation funding.

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Trucking Group Presses Case Against Hidden Funding in Crash Lawsuits

The trucking industry is intensifying its scrutiny of third-party litigation funding, arguing that undisclosed outside capital is distorting the economics of truck-crash lawsuits and driving up the cost of doing business.

As reported by Land Line Media, the Owner-Operator Independent Drivers Association contends that outside investors — sometimes including foreign entities — are bankrolling crash litigation without transparency, prolonging cases, inflating damages, and leaving plaintiffs with modest returns while funders capture the larger share of any recovery. In some instances, the group warns, foreign government involvement raises national-security questions.

The article frames the issue against a wave of state-level legislation. Ohio has enacted disclosure requirements and barred foreign participation outright, with Rep. Meredith Craig declaring that "foreign actors have profited off Ohio citizens and businesses by investing in our courts." North Carolina has gone further, imposing an outright ban on third-party funding backed by fines of up to $50,000, while New Hampshire has prohibited financing by foreign governments and designated adversarial nations. Michigan has approved disclosure and registration requirements and banned foreign entities and incentive payments to attorneys and medical professionals.

Industry voices echo the theme: Tom Balzer of the Ohio Trucking Association argues that such funding "incentivizes frivolous claims, prolongs litigation, and inflates damages." Together, the measures reflect a coordinated push to bring litigation finance in trucking cases into public view — and a signal that transportation is becoming a central front in the national funding-transparency debate.

Cross-Jurisdictional Analysis Charts Diverging Rules for Litigation Funding

Third-party litigation funding has grown into a multibillion-dollar force across major legal markets, yet the rules governing it remain strikingly inconsistent from one jurisdiction to the next, according to a new cross-jurisdictional analysis.

As reported by JD Supra, the review — authored by Arthur Coviello, Colin Dunn, and Mark Selwyn of WilmerHale — examines third-party funding across the United States, United Kingdom, Germany, China, and the Unified Patent Court. It notes that funders now manage billions in assets, with an estimated 20% committed to patent litigation, and that the U.S. leads but no longer dominates a market with established industries in the U.K., Germany, and China.

The authors highlight a sharp regulatory divergence. The United States has built a patchwork of state and federal measures, including disclosure requirements, while the U.K., Germany, China, and the UPC have largely declined to adopt comprehensive rules despite voicing similar concerns about conflicts of interest, funder control, and foreign influence.

The analysis catalogs recent developments: at least five bills pending in Congress addressing transparency and national-security concerns, the lingering effects of the U.K.'s 2023 PACCAR decision and the Civil Justice Council's call for "light touch" regulation, the European Commission's November 2025 decision not to adopt proposed funding rules, and the International Trade Commission's recent disclosure proposal. Without mandatory disclosure, the authors argue, judges and parties cannot reliably assess who holds a stake in a case or where potential conflicts may lie.

Funding Collapse Ends Musical-Instrument Collective Action, Triggering £1.5M in Costs

A proposed UK collective action against five musical-instrument manufacturers has collapsed after its litigation funding fell through, leaving the proposed class representative facing roughly £1.5 million in costs.

As reported by Legal Futures, the Competition Appeal Tribunal addressed the withdrawal of five collective proceedings brought by proposed class representative Elisabetta Sciallis against Fender, Korg, Roland, Yamaha, and Casio. The claims followed a Competition and Markets Authority finding that the manufacturers had restricted retailers' freedom to set prices online.

Ms Sciallis had initially pointed to a funding agreement with North Wall Capital, first set at £6.5 million and later increased to £18 million as more claims were filed. Negotiations between the funder and her firm, Pogust Goodhead, ceased in early 2023, but the tribunal found that the funder's departure was not clearly disclosed until shortly before a March 2026 case management conference — at which point the firm confirmed the North Wall agreement had never materialised and that some 25 alternative funders had been approached without success.

The tribunal, which was critical of how the funding position had been communicated, ordered indemnity costs from April 2023 onward, including £608,000 summarily assessed for three defendants and interim orders of £850,000 for two others. Ms Sciallis withdrew all five proceedings ahead of a June 2026 hearing that would have examined the funding. The case underscores how quickly a collapse in third-party backing can unwind even a well-advanced collective claim.