Litigation Funding Debate Rolls On

San Francisco, CA/ June 2014

At Law Finance Group we are always pleased to debate the merits of litigation finance. Since 1994 we have been a vocal advocate for leveling the civil justice playing field. No one would deny today’s civil justice system is very expensive. The courts are overloaded, difficult to navigate, and defendants can prolong litigation for years. Settlement is the best option for many, but when a well-financed defendant knows that a plaintiff cannot sustain their claims, it creates a very real imbalance of justice.

Gard, a Norwegian maritime insurer, jumped in on the debate in their May 2014 article, High Rollers in the Courtroom Casino – Champerty and the Rise of Litigation Finance. The article discusses the high cost of the U.S. litigation system, and the outgrowth of litigation finance. Gard identifies the two most common viewpoints for and against third-party litigation funding – leveling the playing field vs. promoting frivolous litigation.

To that point Gard discusses the BP Deepwater Horizon Settlement in its article. Gard asserts that litigation funding has “escalated” the litigation, using Law Finance Group as an example. Gard does not give any examples to support its theory leaving one to assume that plaintiffs should just be happy with whatever the sixth largest company in the world by revenue might be willing to pay for a quick conclusion instead of borrowing funds to continue to a fair resolution. Respectfully we disagree. We understand Gard’s position as a maritime insurer but plaintiffs have an equal right to justice, and to be compensated to the fullest measure of their loss. BP has openly used the legal justice system to delay payment in the settlement they agreed to and promoted to the court. Last week BP indicated its intention to appeal to the Supreme Court, and sought a new stay to prevent payment for the third time. “It is unprecedented that a settling defendant is vigorously attacking its settlement,” remarked Alan Zimmerman, Law Finance Group’s CEO. “BP’s actions offer new meaning to the term ‘oil slick’.”

Without litigation funding support during long drawn out proceedings most plaintiffs would simply fold. Litigation funding provides more than just capital to a cash-strapped plaintiff though, it can also provide leverage to an attorney to meet individual capital requirements, pursue their case fully, or minimize litigation risk. Because most of our transactions are non-recourse (if the client loses we don’t get paid); if we encouraged frivolous lawsuits we would soon be out of business. At Law Finance Group we never get involved in litigating the case or interfering in the attorney-client relationship. With our funding, plaintiffs are able to hire the best lawyers for their case, not to promote litigation but to afford a just result.

Looking ahead, we doubt that the need for litigation finance will diminish. Unfortunately, litigation is getting more expensive, and slower as BP’s actions following its settlement illustrates. Although this debate will continue our focus won’t.