The Efficacy of Choice-of-Law and Forum Selection Provisions in Third-Party Litigation Funding Contracts
Anyone with an interest in litigation—parties and lawyers alike—must reckon with the implications of third-party litigation finance (TPLF). In short, TPLF involves financial investment in a lawsuit by a disinterested third-party in exchange for a share of the judgment. For many in the United States, litigation is cost-prohibitive, preventing them from obtaining civil justice. Since the advent of TPLF, it no longer must be the case that defendants with deep pockets can make plaintiffs’ cases disappear by burying them in legal fees. If there is a case with meritorious claims that also has the potential for a substantial judgment, third-party funders can provide plaintiffs with the opportunity to force a fairer settlement. Typically, a third-party funder will provide money for a litigant’s living and legal expenses during pending litigation and will only expect a return upon a successful verdict for the litigant. The commercial practice began in the late eighties and has blossomed into a multi-billion dollar industry involving large banks and hedge funds.