Study Finds Judges Mostly Reject Discovery Requests for Litigation Funding Documents
The conclusion of the study—that judges rarely grant discovery into litigation funding documents—helps explain why opponents of the industry are pushing for legislative and rule changes to require that funding agreements be disclosed.
May 14, 2018 at 12:54 PM
5 minute read
Credit: Alexander Kirch/Shutterstock.com
Amid a push by litigation funding opponents for greater transparency in the industry, a new industry study has found that federal and state court judges have overwhelmingly blocked attempts by litigants to peer into their opponents' legal financing arrangements.
The case law analysis by Tennessee-based litigation funding broker Westfleet Advisors identified 30 cases across the United States in which a party sought to force disclosure of the other sides' litigation financing documents.
In 24 of those cases—or 80 percent—the judge denied the discovery requests altogether or granted limited discovery, according to the study, which was authored by Westfleet CEO Charles Agee, Adams and Reese partner Lucian Pera, and Vanderbilt University law student Steven Vickery.
The study, which is presented as a comprehensive analysis of existing case law, was shared with Law.com on the condition that it not be re-published in its entirely. Certain infographics from the study have been excerpted below.
Source: Westfleet Advisors study. Used with permission.
Agee said in an interview that the impetus for doing the study was to be able to inform potential clients—litigants and lawyers seeking funding—what the state of the law is on disclosure of related documents.
“When you read about it in the press, it's always presented as, 'Well, it's a mixed bag, anything can happen,'” Agee said. “That's not consistent with the research that Lucian and I have done over the years.”
Most of the cases that Westfleet analyzed were in federal court, including the recent decision by a federal judge in Ohio requiring plaintiffs in the opioid multidistrict litigation to disclose any third-party funding agreements to the court in camera.
But the company also looked at decisions in state courts. It identified a case as far back as 2004 in Massachusetts called Conlon v. Rosa, for example, in which the judge allowed discovery of the redacted funding agreement and non-deal documents.
Perhaps indicating how the litigation finance industry has grown in recent years, the bulk of the decisions came down between 2014 and 2016, according to the study.
Source: Westfleet Advisors study. Used with permission.
By far, the most reliable argument to shield litigation finance-related documents from discovery in the cases analyzed was the “work-product” doctrine. Of the 24 decisions in which discovery was denied or granted in a limited way, 20 of them included the work-product doctrine in their reasoning. Arguments based on relevance, the “common interest” doctrine, and attorney-client privilege did not fare as well.
“Most decisions allowing significant discovery of the funding agreement and non-deal documents in the face of a strong work-product argument by the plaintiff were decided several years ago, before the decision in Miller v. Caterpillar in 2014, the leading decision in this area,” the study said.
The Miller decision, handed down by a federal judge in the U.S. District Court for the Northern District of Illinois, denied discovery requests by lawyers for the construction giant Caterpillar in a trade secrets dispute on relevancy and other grounds. It is often cited by the litigation funding industry in arguing why funding agreements and related documents should not be subject to disclosure in litigation.
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