Litigation funding is an industry that is growing in popularity. In 2019, the trend should continue. An article from The American Lawyer titled, “Five Predictions for Litigation Finance in 2019” shares what the expectations are for litigation funders this year.
The first prediction is there will be more companies and firms joining the industry and the number of litigation funders could double.
The second prediction is defense-side litigation will become an important part of market. According to the article, some scenarios include corporate law departments sharing defense fees with funders or law firms taking on fixed-fee defense work with the help of funding.
Number 3 is there will continue to be no initial disclosure of funding. The American Lawyer article says there will be at least another year of study by the federal Advisory Committee on Civil Rules about whether initial disclosure of litigation funding is mandatory with federal cases. In 2014, the U.S. Chamber Institute for Legal Reform proposed an amendment to Rule 26 of the Federal Rules of Civil Procedure that would make disclosure of funding mandatory, but the advisory committee decided to establish rules without obtaining more information was too soon. The article says last September, the committee said it formed a subcommittee to develop rules for multi-district litigation proceedings.
The fourth prediction is a group of litigation finance companies will form an association as a form of self-regulation. They will likely propose a code of best practices to ensure litigation funders are being ethical and sustainable.
The fifth one is there will be a debate on the ethics of fee-splitting between lawyers and nonlawyers, such as major banks and litigation finance firms. According to the article, current rules forbid the sharing of legal fees with a nonlawyer. The author expects a debate between those who support a formal reading of the rule with those who prefer a more functional approach, which would protect clients by ensuring a lawyer’s judgment isn’t compromised by a third party.