Trending Now

Move Over Carnival: Litigation Funding in Brazil is Heating Up!

Move Over Carnival: Litigation Funding in Brazil is Heating Up!

Writing for Vannin’s Funding in Focus series, Carolina Ramirez, Managing Director in Vannin’s newly-formed New York office, describes the litigation funding climate in South America’s largest and most populous nation. Ramirez highlights both the perceptions and practical applications of litigation finance in Brazil, as well as the regulatory climate and challenges facing industry growth in the region.
Although third party funding arrived on the Brazilian scene only recently, the practice has been warmly embraced relative to other Latin American markets. That has to do with Brazil’s liquidity crisis following the Great Recession, in addition to fallout in the aftermath of Operation Car Wash, or Operação Lava Jato, and the subsequent reliance on arbitration as a result. According to Ramirez, Brazilians maintain a perception that litigation funding is utilized solely by impecunious claimants, or those facing liquidity constraints. Although perceptions are gradually changing, she points to one local practitioner who claims that “case law on the matter is scarce and major Brazilian arbitration chambers do not publish their precedents, so parties (be it funders, funded parties or adversaries to a funded party) still have to deal with a reasonable (and potentially damaging) degree of uncertainty.” Yet despite the uncertainty, the benefits of litigation funding are widely being recognized, with one practitioner going so far as to state that the practice “will evolve to [allow] major companies seeking reasonable financing that allows them to pursue their core business objectives while conducting high level litigation.” Such is the reality of litigation funding in other major jurisdictions, so why not Brazil? Major obstacles to the adoption of litigation funding have to do with costs and time constraints — the former containing too few, and the latter containing far too many. The cost of filing a claim (appeal included) in Brazil is extraordinarily low, which of course precludes firms from seeking external funding. Additionally, cases can go through many layers of appeal before reaching conclusion, which means that funders can’t accurately predict the timing of their expected recovery. Essentially, the barriers to justice that exist in Brazil work against litigation funders, whereas the barriers that exist in the United States, for example (those being high upfront costs and balance sheet exposure), directly play into a litigation funder’s hands. According to Ramirez, by and large, third party funding is unregulated in Brazil. “Only recently did the Brazil-Canada Chamber of Commerce (“CAM/CCBC”) – one of the most renowned institutions in Brazil – issue a resolution specifically recommending that parties disclose the use of funding at the outset of an arbitration (Administrative Resolution 18/2016).” Practitioners on the ground believe in the likelihood that other arbitral institutions will at some point promulgate further regulations on third party funding in Brazil, though at present, the industry remains unregulated. So is Brazil on the precipice of future growth in the area of litigation funding? Ramirez seems to think so. “The resounding message,” she writes, “is that Brazil is ripe for third party funding and that the time to enter the market is now. It is also clear that practitioners are enthusiastic about the prospect of having foreign third party funders with significant experience enter the market and level the playing field which has thus far been dominated by a single local Brazilian third party funder.” To read Ramirez’s article in its entirety, please visit this link

Commercial

View All

Trucking Industry Backs Federal Liability Bill Amid Litigation Funding Concerns

A bicameral bill introduced in Congress would bar liability claims premised on vehicle safety standards stricter than those set by federal regulators, and has drawn support from a trucking and insurance coalition that counts third-party litigation funding among the pressures driving up its costs.

As reported by Transport Topics, the Uniform Vehicle Safety Standards Act was introduced on August 6 by Rep. Mike Flood of Nebraska, joined by Reps. David Rouzer, Jay Obernolte and Jake Ellzey, with a Senate companion from Sens. Deb Fischer and Cynthia Lummis. The measure would amend Title 49 of the U.S. Code to prohibit common law claims alleging that a vehicle should have met standards exceeding those established by the National Highway Traffic Safety Administration.

"In recent years, we've seen a sharp rise in lawsuits awarding damages based on state standards instead of the federal safety standards trucking companies are already required to meet," Flood said. Alex Rosen of the American Trucking Associations argued that where NHTSA has determined a standard strikes the right balance, "that expert determination should carry greater weight than hindsight judgments."

The bill itself contains no litigation funding provisions. Funding enters through the coalition assembled behind it, which includes the American Property Casualty Insurance Association and the National Association of Mutual Insurance Companies alongside nine trucking organizations and Werner Enterprises. Research from the American Transportation Research Institute cited in the piece identifies third-party litigation funding and staged accidents as evolving legal threats to carriers, and links excessive litigation to insurance premiums that have climbed 36% over eight years.

For funders, the significance is positional rather than legal. The trucking sector has become one of the more organized constituencies pressing for disclosure and restriction at the state level, and preemption bills of this kind widen the front without naming the industry directly.

Conservative Columnist Argues Litigation Funding Limits Would Disarm the Right

A guest column published this week makes a right-of-center case against pending federal restrictions on third-party litigation funding, arguing that the measures would strip conservative activists and small business owners of the capital they need to litigate against better-resourced opponents.

Writing in The State Journal, Drew Johnson takes aim at the Protecting Our Courts From Foreign Manipulation Act, led by Rep. Ben Cline of Virginia, and at Senator Thom Tillis's proposal to impose a punitive tax on litigation funding proceeds. Johnson is a senior fellow at the National Center for Public Policy Research and the 2026 Republican nominee for Nevada State Treasurer.

His central argument is that the bill's stated purpose, preventing foreign governments from bankrolling harassment suits, is already served by existing mechanisms including CFIUS review and judicial discretion, leaving the new disclosure requirements to do work their sponsors did not intend. Broad disclosure obligations, he contends, would deter funders from backing cases at all, and the resulting shortfall would fall hardest on plaintiffs without institutional balance sheets behind them.

Johnson illustrates the point with Jack Phillips, the Colorado baker who lost an estimated 40% of his income during years of litigation before prevailing at the Supreme Court with backing from Alliance Defending Freedom. Absent outside support, he writes, Phillips "could have easily been forced to surrender."

The column is notable less for its policy analysis than for its author. Litigation funding restrictions have advanced largely on Republican votes, and the industry's defenders have generally come from the plaintiffs' bar. Johnson's framing, that citizens facing wealthy opponents should not be forced to fight alone, is an attempt to contest that ground.

Five Years On, Arizona’s ABS Data Shows No Systemic Ethical Breakdown, Article Argues

An article published in the Arizona State University Corporate and Business Law Journal argues that five years of operating data under Arizona's Alternative Business Structure framework has not produced the ethical failures its opponents predicted, and that the debate is moving from theoretical objections to observable outcomes.

Writing in the ASU Corporate and Business Law Journal, Alex Chucri traces the framework to August 2020, when Arizona became the first state to eliminate ABA Model Rule 5.4 and permit non-lawyer ownership of law firms, with the ABS regime taking effect on January 1, 2021 under Arizona Supreme Court order R-20-0034. The central claim is structural: the state did not remove oversight so much as replace blanket prohibition with licensing, compliance obligations and regulatory accountability. Non-lawyers may hold equity, share profits and participate in management, but only under Supreme Court supervision, with approved compliance counsel, reporting procedures and audit requirements.

The article marshals the program's numbers. Licenses grew from two approvals in 2020 to 15 in 2021 and 25 in each of 2022 and 2023, reaching approximately 150 licensed entities by March 2026, with 114 ABSs actively operating during 2024. No ethics complaints were filed against ABS entities in the program's first three years; the first arrived in 2024, when the State Bar initiated disciplinary action involving two ABS-affiliated attorneys. A preliminary analysis of 2024 disciplinary actions, which the author acknowledges is limited by incomplete ABS staffing data, suggests ABS-affiliated lawyers faced discipline at a rate well below the broader Arizona attorney population.

Readers should weigh the source. Chucri is founder and CEO of Pravati Capital and in 2024 founded 1787 Legal Group, the Scottsdale ABS the article offers as its case in point. The argument nonetheless lands at a moment when several states, Illinois among them this week, are moving in the opposite direction, and Arizona remains the only jurisdiction with a five-year record to argue from.