J. Jonas Anderson
94 Geo. Wash. L. Rev. 392
Third-party litigation funding (“TPLF”) is having a moment. The TPLF industry is exploding, with upwards of seventeen billion dollars flowing into the industry; the Supreme Court recently asked litigants how many of the Court’s cases are third-party funded; and Congress is considering numerous bills on TPLF that would require changes to the practice of TPLF, such as disclosure of third-party funders during litigation and restrictions on how third-party funders can operate.
TPLF, however, operates in the shadows: very little is publicly known about the industry, because most third-party funders are privately held corporations. Even simple questions from the Supreme Court, like “How many of our cases are third-party funded?” or “What types of cases are third-party funded?” are impossible to answer with any sort of empirical precision. This Article empirically studies the rate of TPLF in U.S. federal courts, thus beginning to provide answers to those questions.
The data for this Article comes from two U.S. federal courts that have recently attempted to look behind the opaque curtain of litigation funding. The U.S. District Court for the District of New Jersey and the chief judge on the U.S. District Court for the District of Delaware have mandated the disclosure of third-party funders in their courtrooms. These courts also require disclosure of the extent—if any—of third-party control over the litigation.
The results of this study demonstrate that the amount of TPLF is, at present, highly concentrated in certain areas, especially patent law, in which sixteen percent of cases at one district court studied are third-party funded. Importantly, this study demonstrates that the existence of TPLF disclosure requirements drives parties to file elsewhere: in districts that do not require TPLF disclosure.
