The New York Times ran a fascinating story this week about third-party financiers of lawsuits. The Times, together with the Center for Public Integrity, reported that third-party financing of contingency lawsuits is on rise. Specialized lending firms that cater to law firms have emerged, charging premium interest rates (from 15-24%). The funds are used to pay for increasingly complex and costly plaintiffs’ litigation. The Times reports that total investment in this arena now exceeds $1 billion.
Yeah–you read that right. $1B. This factoid in the article that really caught my attention–litigation financing is a big business, and how many of us really knew it existed? When I first read the article, I didn’t really know how I felt about this–except that it seemed like an ethical minefield, but appears to be above board in most states. The article is accompanied by commentary from a panel of law professors, who discuss some of these ethical issues.
