Are Litigation Funders Exposed?

Third-party litigation funders regularly argue before ethics committees, state bar associations and the media that this burgeoning field is a positive development in the practice of law. Primarily, some assert that their funding allows individuals and companies shut out of the court room by excessive litigation costs to "have their day in court" when they would otherwise have to bow out against the Goliath to their proverbial David. Of course, providing the necessary financial backing for a lawsuit is not done out of the goodness of funders' hearts. A portion of the proceeds from any settlement or award goes to the funder after the attorneys' fees and costs are paid. Although the latter is always negotiable, funders must therefore calculate at the outset the likelihood of victory, the amount expected in total, and what their hypothetical share would be.
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