Could nonlawyer investors soon begin financing class action and mass tort litigation? Not if the U.S. heeds new warnings by Skadden, Arps, Slate, Meagher & Flom partner John Beisner, who predicts an onslaught of dubious claims if the plaintiffs bar is allowed to offload risk to third parties.

Here's a cautionary tale for the burgeoning business of litigation finance: Betting on the outcome of federal litigation can be a costly endeavor.

Deutsche Bank found out the hard way that there's a downside to litigation finance, getting nothing for its investment in a $500 million suit against Bank of America. But the real question is why banks are dabbling in the litigation finance business--and whether such shadow investments should be exposed.