But we learned by reading a story in The National Law Journal by Leigh Jones that third-party financing is not just aimed at plaintiffs. Major corporations who might be defendants are also interested. James Tyrrell, Jr., chair of the toxic tort and product liability groups at Patton Boggs, says he’s getting inquiries from his clients about third-party financing. And Justin Miller, who heads DuPont’s intellectual property group, said that although he would need to know more about the context, he’s open to the idea of investor-funded litigation. “I certainly see it a viable option for a lot of companies,” he said.
How would third-party financing work on the defense side of the equation? Jones of The National Law Journal answers like this: “The client agrees to pay the investor to handle the defense of a case. The investment firm bets that the cost of settling the case and the attorney fees will fall below the amount it received from the client. The investment firm can then pocket the rest.”
Ethical and practical issues need to be sorted out before third-party financing will take hold in the U.S. For example, some states allow third-party financing, and some don’t. And if an investor is paying the attorney–not the client–questions about conflicting loyalties can arise.
But Richard Hans, chair of DLA Piper’s New York litigation practice, tells Jones that the third-party financing firms are “working hard, trying to overcome those issues.”