Citizens Against Lawsuit Abuse warns outside investors quietly fund lawsuits for profit

Citizens Against Lawsuit Abuse (CALA) has announced its opposition to third-party litigation financing, warning that outside investors are funding lawsuits for financial gain and driving up legal costs for small businesses. This statement was made in a post on X.

According to CALA's June 11 post on X, Third-Party Litigation Financing (TPLF) allows external investors to profit from litigation by quietly funding lawsuits in exchange for a portion of any settlement or judgment. The organization states that TPLF arrangements often lack transparency, as neither courts nor defendants are routinely informed about the financial backers behind legal claims. CALA argues that this practice increases legal costs and adds pressure on small businesses already struggling with excessive litigation burdens.

As reported by Reuters in March 2024, the global litigation finance market is valued in the billions, with major players like Burford Capital reporting record growth and investments in U.S. legal cases. Reuters notes that critics are concerned about the rapid expansion of this industry due to a lack of disclosure rules, which they argue allows financiers to unduly influence litigation outcomes and complicate settlements. Legal analysts quoted by Reuters say these opaque funding structures often result in increased costs for all parties, particularly affecting small businesses defending against well-funded lawsuits.

According to a 2023 report from the U.S. Government Accountability Office (GAO), TPLF remains largely unregulated in the United States and is not subject to standardized rules for disclosure or oversight. The GAO highlights that this regulatory gap makes it difficult for courts and opposing parties to assess who is driving and benefiting from litigation, raising concerns about fairness and potential conflicts of interest. The report has fueled calls by CALA and other advocacy organizations for legislative reforms requiring full transparency and disclosure of litigation funding arrangements.

Citizens Against Lawsuit Abuse is a grassroots advocacy organization dedicated to exposing and fighting lawsuit abuse while advocating for legal reforms benefiting small businesses and consumers. According to its official website, CALA works to educate the public, support legislative reforms, and push for greater transparency in the legal system, including regulation of TPLF practices. The organization collaborates with local communities, industry partners, and policymakers to promote a fairer legal environment and reduce the economic burden of excessive litigation.