As litigation finance becomes more prevalent in the United States, so also has the attention paid to its regulation. The U.S. currently lacks a federal regulatory scheme specific to litigation funding, including the market’s rapidly expanding commercial sector. Instead, regulation has come almost entirely at the state level, where a medley of case law, statutes, common law doctrines, and ethics rules has formed guidelines that can vary greatly among jurisdictions.

There also exists an assortment of federal case law developed in federal civil cases litigated in those states, where federal judges are called upon to apply those guidelines. Thus, individual state treatment of third-party funding agreements has drawn a spotlight.