Third party litigation funding “from taboo to transparency”

05th Apr 2017

A recent article by Yves Faguy in the Canadian Bar Association’s magazine highlights the need for transparency in the litigation funding industry. The article shows the growth of the industry and the increasing prominence of litigation funding on a global stage citing the use of funding in major cases in the UK, Germany, and US.

The author asserts that critics of third party litigation funding are “justifiably worried that funders will subvert justice by unduly influencing decisions about legal strategies to pursue and when to settle a case” and notes that “these are decisions that, ultimately, should rest in the plaintiff’s hands”.

Faguy cites Australian lawyer Michael Duffy’s recent article in the University of New South Wales Law Journal which makes the case for stricter regulation of the third party litigation funding industry by using game theory to analyze the outcome of third party litigation funding for litigants, funders and lawyers.

Faguy concludes by proposing that lawmakers should impose “clear and uniform disclosure rules on all contractual and financial arrangements” between litigants, funders and lawyers so that funders know “what is appropriate behavior” and to ultimately increase transparency in the industry.