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Let’s Set The Record Straight: Consumer Legal Funding is Not Litigation Finance

February 20, 2024

Let’s Set The Record Straight: Consumer Legal Funding is Not Litigation Finance

The following piece was contributed by Eric Schuller, President of the Alliance for Responsible Consumer Legal Funding (ARC). Consumer Legal Funding, in its various forms, is pretty mundane. It covers living expenses, such as rent, food, clothes and keeping the lights on. It might even enable a family to provide Christmas or birthday gifts for their children. In every case, its sole purpose is to help individuals and families alleviate the cash-flow problems that arise in the wake of an accident or other tragic circumstances, while the individuals and families are seeking compensation for their situation. It has nothing to do with financing of the litigation. What is happing is that groups and individuals who are not taking the time and effort to know the differences between the two different products and are lumping them together. They are saying all transactions where a party to litigation receives any monetary resources from a non-party are considered Third Party-Litigation- Financing (TPLF). It paints a bleak picture of “foreign adversaries . . . undermining U.S. national economic and security interests through the infiltration of the American litigation system,” and it is the end of the free world as we know it. Consumer Legal Funding is nothing like that, it helps a consumer meet their financial obligations while their legal claim is making its way through the justice system. It does not pay for deposition cost. It does not pay for legal fees or expenses. Most of the time the funds go to help a consumer who has had a car accident bridge the financial gap, but there are other times where it goes to help a person who was wrongfully convicted and spent nearly two decades of their life in prison for a crime they did not commit. Consumer legal funding helped them get their life back in assisting with living expenses while they got the justice they so justly deserved. It helped a Police Officer pay to keep a roof over their family’s head while they had their day in court after being wrongfully discharged. Then the case of a single mother of three who was going back to college to make a better life for her children and had to move out of their home because of a toxic mold infestation. She used consumer legal funding to pay for a mobile home so she and her three children could live in a safe, toxic-free, environment while the situation was fixed. There is the case when a 16-year-old was made a quadriplegic due to medical negligence. The family had to modify their home to make accommodations to care for their loved one. Consumer legal funding was the only way they were able to take care of their teenager while the case made its way through the long legal system. Another was a woman was involved in a car accident and her teeth were shattered because of the accident. She used consumer legal funding to get a new set of teeth. She said, “it gave me my smile back”. Finally, there have been times where consumer legal funding was used to help pay for funeral expenses of a loved one that was tragically killed in an accident. Sadly, some families had no other means of taking their loved one to their final resting place if it had not been for consumer legal funding. But what is happening are those groups and individuals that do not take the time, or want to take the time, to learn what consumer legal funding really is. They hear terms like, “corrupting the legal system”, “leads to filing frivolous litigation” and the latest is “foreign governments are leading to international sabotage of our courts”. Then charge ahead saying “the sky is falling; the sky is falling”.
  • How does giving money to a single mother so she can have her children live in a toxic free environment lead to “international sabotage”?
  • How does allowing a person who spent nearly 2 decades of their life living in 48 square foot space corrupting the legal system?
  • How does allowing a person to get their smile back lead to frivolous litigation?
Litigation Financing is just that “financing of the litigation”. It is used to pay for lawyers. It is used to pay for depositions. It is used to pay for expert witnesses. It is used to pay court costs. None of which consumer legal funding does. In fact, in the legislation that we have promoted we specifically state the funds we provide to a consumer cannot be used for those purposes. Don’t be fooled by someone who is throwing out buzz words that make one think we are on the brink of judicial destruction by confusing Consumer Legal Funding with Litigation Financing. They both may be fruit. But one is an apple and one is an orange. Eric Schuller President Alliance for Responsible Consumer Legal Funding
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Disclosure Tide Is Turning for Third-Party Litigation Funding

By John Freund |

Courts and legislatures across the United States are rewriting the rules on third-party litigation funding disclosure, signaling a notable shift from the traditional confidentiality that has long shielded these arrangements.

As reported by Bloomberg Law, partners at King & Spalding argue that the era of blanket privilege protection for funding agreements may be ending. Georgia's 2025 Courts Access and Consumer Protection Act now mandates disclosure of funding arrangements exceeding $25,000 and requires funders to register with state banking authorities, with violations carrying potential felony charges. West Virginia, Wisconsin, Montana, Indiana, and Louisiana have enacted similar requirements with varying approaches.

Federal courts are also moving in this direction. The Northern District of Illinois ruled in *Miller UK Ltd. v. Caterpillar, Inc.* that sharing documents with funders does not preserve privilege when parties lack common legal interests, while the District of Delaware has issued standing orders requiring litigation funding disclosure in patent cases.

The authors recommend that litigants incorporate funding discovery into standard litigation strategy in jurisdictions with disclosure statutes and audit existing arrangements for compliance with registration obligations. The trend reflects a broader push for transparency in an industry that has grown into a multibillion-dollar market backed by hedge funds, private equity firms, and sovereign wealth funds.

Consumer

Legal Bay Provides Update on Catholic Church Bankruptcy Abuse Settlements as Cases Near Payout Phase

By John Freund |

Pre-settlement funding provider Legal Bay has released an update on several major Catholic Church diocese bankruptcy settlements that are approaching the payout phase after years of delays in bankruptcy courts.

As reported by PR Newswire, the firm is tracking six diocesan bankruptcies where survivors of clergy abuse are awaiting resolution. Among the cases closest to distributing funds are the Diocese of Rockville Centre in New York with a $323 million court-approved settlement, the Diocese of Rochester with a $246–$256 million approved settlement, and the Diocese of Syracuse with a $176 million approved settlement.

Three additional cases remain pending court approval: the Diocese of Camden, New Jersey at $180 million, the Archdiocese of New Orleans at $230 million, and the Diocese of Buffalo with a proposed settlement ranging from $150 million to $274 million.

Legal Bay CEO Chris Janish said the company receives daily requests from clients seeking updates and "felt it was important to provide a clear snapshot of which cases are closest to reaching the payout stage." The firm provides settlement funding and lawsuit loans to abuse survivors facing financial hardship during the prolonged litigation process.

The update underscores the continued role of pre-settlement funding in mass tort cases where claimants often wait years for bankruptcy proceedings to conclude before receiving compensation.

Consumer

Legal Bay Highlights Uber’s “Woman Driver Only” Option as Rideshare Sexual Assault Litigation Grows

By John Freund |

Legal Bay LLC, a national provider of pre-settlement funding and lawsuit loans, is highlighting Uber's introduction of a "Woman Driver Only" option as rideshare sexual assault litigation continues to expand across the country.

According to PR Newswire, the policy change comes as more than 3,000 sexual assault lawsuits against Uber move through federal court as part of a multidistrict litigation. A federal jury in Arizona recently awarded $8.5 million to a passenger in what is considered the first major bellwether verdict in the MDL.

Legal analysts estimate that individual settlements in rideshare sexual assault cases may range from approximately $50,000 to over $1 million, depending on severity and evidence. CEO Chris Janish described rideshare litigation as "one of the fastest-growing areas of sexual assault litigation and mass tort law."

Legal Bay provides non-recourse pre-settlement advances to plaintiffs in active lawsuits, meaning repayment is only required if a case results in a successful outcome. The company's announcement underscores the growing intersection of consumer legal funding and mass tort litigation, as plaintiffs navigating lengthy MDL timelines increasingly seek financial support while their cases proceed.