FOLLOW THE MONEY? A PROPOSED APPROACH FOR DISCLOSURE OF LITIGATION FINANCE AGREEMENTS
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paragraphs explain the main reasons the practice is so profoundly important and
why it has generated so much interest among academics, lawyers, legislatures, the
judiciary, the media, and the investment community.
A. Litigation Finance Implicates Foundational Questions of Civil Justice
The primary import of the industry is its propensity to increase the number of
cases brought. This is either a positive or a negative depending on whether one
focuses on the potential to increase access to justice for deserving but under-
resourced plaintiffs, or on the potential to increase non-meritorious litigation.
https://www.instituteforlegalreform.com/uploads/sites/1/thirdparty
litigationfinancing.pdf; BEISNER & RUBIN, supra note 127, at 1 (labeling litigation finance “a
clear and present danger to the impartial and efficient administration of civil justice in the
United States”); Third Party Litigation Funding, U.S. CHAMBER INST. FOR LEGAL REFORM,
https://instituteforlegalreform.com/issues/third-party-litigation-funding (last visited Sept.
8, 2019) [hereinafter Third Party Litigation Funding]. Other critics include Jeremy Kidd, To
Fund or Not to Fund: The Need for Second-Best Solutions to the Litigation Finance Dilemma,
8 J.L. ECON. & POL’Y 613 (2012) and Joanna M. Shepherd, Ideal Versus Reality in Third-Party
Litigation Financing, 8 J.L. ECON. & POL’Y 593 (2012). Proponents include ABA Comm. on
Ethics & Prof’l Responsibility, see Formal Opinion 484 (Nov. 27, 2018), N.Y. State Bar Ass’n
Comm. on Prof’l Ethics, see Ethics Opinion 1104 (Nov. 15, 2016), and scores of scholars, see,
e.g., Susan Lorde Martin, Litigation Financing: Another Subprime Industry That Has a Place
in the United States Market, 53 VILL. L. REV. 83 (2008); Susan Lorde Martin, The Litigation
Financing Industry: The Wild West of Finance Should Be Tamed Not Outlawed, 10 FORDHAM
J. CORP. & FIN. L. 55 (2004); Julia H. McLaughlin, Litigation Funding: Charting a Legal and
Ethical Course, 31 VT. L. REV. 615 (2007); Jonathan T. Molot, Litigation Finance: A Market
Solution to a Procedural Problem, 99 GEO. L.J. 65 (2010); Richard W. Painter, Litigating on a
Contingency: A Monopoly of Champions or a Market for Champerty?, 71 CHI.-KENT L. REV.
625 (1995); Sebok, Litigation Investment and Legal Ethics, supra note 141, at 111.
For arguments that litigation finance is likely to increase non-meritorious litigation,
see, for example, Jeremy Kidd, Modeling the Likely Effects of Litigation Financing, 47 LOY.
U. CHI. L.J. 1239, 1258-60 (2016); Thomas J. Donohue, Stopping the Litigation Machine, U.S.
CHAMBER OF COMM. (Oct. 31, 2016, 9:00 AM), https://www.uschamber.com/series/your-
corner/stopping-the-litigation-machine; and Third Party Litigation Funding, supra note
151. For arguments that litigation is unlikely to increase non-meritorious litigation, see, for
example, Molot, supra note 151, at 106-07; Shannon, supra note 141, at 874-75. More
generally, for literature on the socially desirable level of litigation, see, for example,
Richard L. Abel, The Real Tort Crisis — Too Few Claims, 48 OHIO ST. L.J. 443 (1987) and Nora
Freeman Engstrom, ISO the Missing Plaintiff, JOTWELL (Apr. 12, 2017),
https://torts.jotwell.com/iso-the-missing-plaintiff/ (book review) (“Using a number of
methodologies, these researchers have, again and again, confirmed Abel’s basic empirical
premise. In most areas of the tort law ecosystem, only a small fraction of Americans seek
compensation, even following negligently inflicted injury.”). For a classic law and
economics analysis of the suboptimal levels of litigation, see Steven Shavell, The
Fundamental Divergence Between the Private and the Social Motive to Use the Legal System,
26 J. LEGAL STUD. 575 (1997); Nora Freeman Engstrom, Re-Re-Financing Civil Litigation: