Capital Corner
By Will Melofchik – NCOIL General Counsel
Greetings – Welcome to the latest installment of Capital Corner, a column that aims to update you on some of the issues that NCOIL is following. Below are some of the issues that NCOIL may be discussing at the upcoming NCOIL Annual Meeting and will be monitoring throughout the remainder of the year.
Third Party Litigation Funding: Will NCOIL Re-Enter the Debate?
Third-party litigation financing (TPLF) is an arrangement in which a funder who is not a party to the lawsuit agrees to provide funding to a litigant (typically a plaintiff) or law firm in exchange for an interest in the potential recovery in a lawsuit1. This funding generally falls into two categories: commercial and consumer funding2. Commercial arrangements are typically between funders and corporate litigants or law firms and involve commercial claims, such as breach of contract3. Consumer arrangements are typically between a funder and an individual person, such as the plaintiff in a personal injury case4.
TPLF is undoubtedly controversial with opponents arguing, among other things, that: there is a lack of overall transparency with how the TPLF industry operates; it has the potential to draw out litigation and increase costs (ultimately leading to increased insurance premiums for policyholders); and encouraging frivolous lawsuits5. Supporters of TPLF assert that it is a socially valuable activity, expanding access to the courtroom and enabling meritorious claims to be vindicated that otherwise would lack the funding to go forward6.
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