Concealed third-party litigation funding
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Omer Y. Pelled
Abstract
Litigation entails substantial expenses, such as attorney fees and payment to experts. Third-party litigation funding aids individuals and enterprises who lack the financial means to pursue legal action by providing financial support to cover these expenses in return for a portion of the gains. The current literature focuses on direct, for-profit funding. This Article extends the discussion to other funding opportunities. Among these, concealed litigation funding alludes to a scenario where a funder’s investment decreases the costs for one of the litigants, but without any direct transfer of funds. In return, the funder acquires an indirect advantage, such as reducing its own liability risk or the liability risk of its investors. Several jurisdictions restrict direct funding, citing concerns about increased litigation, decreasing incentives to settle, and interference with litigants’ case management. This Article highlights the potential consequences of regulating only direct, for-profit funding. It suggests that other forms of funding, such as donations or concealed funding, distort litigation incentives more than direct funding. As a result, restricting direct funding harms litigants who do not have access to concealed funding without solving the problems of excessive litigation and unwillingness to settle.
© 2025 by Theoretical Inquiries in Law
Articles in the same Issue
- Frontmatter
- Third-Party Litigation Funding: Past, Present, and Future
- Introduction
- Agency costs in third-party litigation finance reconsidered
- What litigation funders can learn about settlement rights from the law of liability insurance
- Third-Party litigation funding: Panacea or more problems?
- Controlling the delegation of control
- Asking the right questions about legal finance in united states aggregate dispute resolution
- The WHAC-A-Mole game: An empirical analysis of the regulation of litigant third-party financing
- Consumer litigant finance and legal ethics: Empirical observations from texas
- Through a glass darkly: TPLF viewed through a procedural lens
- Third-Party litigation funding in the european union: Regulatory challenges
- Imagining how U.S. federalism would affect third-party funding regulation
- Winner pays: An alternative method of public funding
- The business ethics of litigation finance
- Concealed third-party litigation funding
Articles in the same Issue
- Frontmatter
- Third-Party Litigation Funding: Past, Present, and Future
- Introduction
- Agency costs in third-party litigation finance reconsidered
- What litigation funders can learn about settlement rights from the law of liability insurance
- Third-Party litigation funding: Panacea or more problems?
- Controlling the delegation of control
- Asking the right questions about legal finance in united states aggregate dispute resolution
- The WHAC-A-Mole game: An empirical analysis of the regulation of litigant third-party financing
- Consumer litigant finance and legal ethics: Empirical observations from texas
- Through a glass darkly: TPLF viewed through a procedural lens
- Third-Party litigation funding in the european union: Regulatory challenges
- Imagining how U.S. federalism would affect third-party funding regulation
- Winner pays: An alternative method of public funding
- The business ethics of litigation finance
- Concealed third-party litigation funding
