"Rise of Litigation Finance Companies Raises Legal and Ethical Concerns"

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December 05, 2018

An ABA Journal “In-Depth” story shows how litigation financing has grown into a “multi-billion-dollar global industry,” and the “legal and ethical concerns” that come from it.

The article says the potential for litigation funders to “dictat[e] legal strategy or pressur[e] attorneys over settlement amounts” remains “one of the biggest tension points between proponents and critics” of the practice. The article points to the infamous Ecuadorian Chevron case, which a U.S. judge found to be “procured by fraud.” In a RICO case against the plaintiffs' lawyer, documents show the litigation funder, Burford Capital, was concerned about an “unnaturally low” settlement in the Ecuadorian case.

John Beisner, a partner with the Skadden, Arps, Slate, Meagher, and Flom law firm, said “the problem [with litigation funding]—the settlement isn’t dictated by the strength or weakness of the case, but by the investors.”