The newest investment craze gaining popularity across the country is one that is operating largely in secret and targeting the civil justice system – raising costs in the process. The process, known as third-party litigation funding (TPLF), is allowing private investors to use civil lawsuits as their own profitable investment strategy. A recent opinion piece highlights the influence TPLF agreements are having on civil litigation throughout the country – and the potential pitfalls of allowing such a system to operate largely in the shadows.
Under TPLF agreements, outside investors fund lawsuits that they don’t have any part in. If the suit results in a financial verdict, the investors are owed a specific portion of the settlement. There is no regulation or oversight of TPLF agreements in Pennsylvania, and often times, they are not brought to light as part of the litigation process. This lack of transparency results in the judges and other parties in the case being unaware that a third-party is involved and influencing decisions regarding the plaintiffs’ case. The TPLF system also can lend itself to abuse – with no safeguards in place for consumers.
The piece goes on to expose how consumers can be taken advantage of in TPLF situations and offers proposed protections that will bring much needed transparency to the entire system. This past spring, Pennsylvania’s Supreme Court’s Civil Rules Committee accepted comments on a draft rule requiring disclosure of TPLF agreements.. We are awaiting for further developments and will keep you apprised of any action or changes regarding TPLF agreements in Pennsylvania.