The Possibility That a Funding Agreement Might Allow a Non-Party to Exercise Influence and Control Over Pending Litigation.Ethical Issues to be Aware of in Cases Involving Litigation Funding 5 While litigation funding may allow greater access to “justice”, it is clear that litigation funding is rife with potential ethical issues and dilemmas, including the potential for inappropriate relationships between lawyers and funding companies, the potential abuse and manipulation of unsophisticated plaintiffs, the funding of litigation for purposes other than to right a wrong done to an injured plaintiff, and the inappropriate exercise of influence over the litigation by third-party funders. ![]() Those who support litigation funding argue that it evens the playing field between individual plaintiffs and large corporations and allows greater access to the judicial system. The advances received from the funding company can be used to fund litigation or for non-litigation related expenses, such as the payment of rent, groceries, and other necessities by individual plaintiffs. ![]() Goliath” lawsuits by those in favor of litigation funding), class action plaintiffs, plaintiffs engaging in expansive litigation requiring significant out-of-pocket expenses, and plaintiffs’ lawyers and law firms. Similarly, if the case fails for whatever reason, nothing is owed to the lender.įunding companies advertise their services to a wide-range of players, including individual plaintiffs pursuing claims against a corporate defendant with deep pockets (often referred to as “David v. 3 Therefore, if the amount recovered in the lawsuit is less than the total amount owed to the lender, the lender may be entitled to the proceeds recovered, but nothing more. 2 Typically, the advances are nonrecourse in that the lender cannot recover anything outside of the litigation. In its most basic form, litigation funding allows a plaintiff or a lawyer to obtain a cash advance from a third-party lender in exchange for a percentage of the proceeds recovered from the litigation. ![]() law firms reported using litigation funding, which was a 414% increase in use since 2013 when only 7% of law firms reported using it). It is undeniable that litigation funding is taking the legal world by storm. law firms reported using litigation funding, which was a 414% increase in use since 2013 when only 7% of law firms reported using it).1
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