Is outside litigation funding good for consumers and others who need court access?

As many of our readers know, there's controversy over whether third parties (that is, non-lawyers and non-clients) should fund large, complex litigation. Two new articles address the question, in part asking whether outside funding benefits plaintiffs, particularly in class and other representative litigation.

First, there's "Litigation Finance: What Do Judges Need to Know?" by law professor Bert Huang. Here is the abstract:

growth of “litigation finance” — the funding of lawsuits by outside
investors who are neither parties nor counsel — is being closely watched
by academics, the press, and the bar. The practice poses risks of
conflicting interests and improper influence; and yet if carefully
managed it may in fact enhance party autonomy. What questions, then,
should judges be asking when dealing with a case with outside funding? This
symposium essay offers judges a starting point: a menu of questions to
ask parties who receive such financing. These inquiries aim to pierce
simplistic labels such as “loan” or “investment,” in order to help
judges grasp the true nature of the funder’s stake, incentives, and
control. For instance: Is the investor taking interest payments, a
share of the recovery, or both? Does the investor’s return depend on
whether the outcome is a judgment or a settlement? Or on whether the
remedy is injunctive or monetary? Has the investor in effect chosen the
party’s counsel? Can it exert de facto influence over litigation
decisions by threatening to withdraw funding? Does the arrangement
limit investments by other funders? How does it affect the amount or
timing of the party’s or counsel’s compensation? Further
questions are raised here to prompt judges to consider new ways not only
to uncover, but also to respond to — or even to harness — such
third-party involvement. Special emphasis is given to the context of
mass litigation. For instance: Should opposing counsel be allowed to
pose questions about the financing? Should the court direct that
financing details be included in motions for class certification and in
notices to class members? How might the court take the funding
structure into account in assigning attorneys’ fees, say, or in
approving settlements?

Next, there's "Litigation Funding and the Problem of Agency Cost in Representative Actions" by law professor Sam Issacharoff. Here is the abstract:

sources of litigation funding are complicating the already difficult
world of complex litigation. While still in its infancy in the United
States, the role of equity financing of contingent litigation is now
well rooted in Australia, and establishing itself in Canada and the
United Kingdom as well. This Article examines the market gaps filled by
litigation funders in Australia and then the potential role to be
played in the United States. In particular, the Article looks to
litigation funding as a way to potentially protect absent class members
in class actions and other representative proceedings.

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