The U.S. Chamber Institute for Legal Reform has announced in a press release that third-party litigation funding (TPLF) has experienced rapid growth over the past decade. This expansion enables secret nonparty investments in lawsuits for profit, raising concerns about fairness, national security, and plaintiffs’ recovery.
According to the U.S. Chamber Institute for Legal Reform’s 2024 report “Grim Realities: Debunking Myths in Third-Party Litigation Funding,” the TPLF industry has become a multibillion-dollar global enterprise with little oversight or transparency. The report explains that litigation funders provide capital to plaintiffs or law firms in exchange for a portion of any eventual payout, often exercising behind-the-scenes control over strategic and settlement decisions. The Institute emphasizes that this unchecked growth poses systemic risks to the fairness of civil courts and calls for reforms to bring TPLF under the same regulatory scrutiny applied to other financial industries.
The report “Grim Realities” and additional reporting from Reuters indicate that litigation funder Burford Capital used its $140 million funding agreement with Sysco Corp. to gain control over antitrust litigation against U.S. meat suppliers. The agreement gave Burford veto power over any settlement, which it exercised, preventing Sysco from accepting offers it deemed reasonable. The Institute argues that this case demonstrates how profit motives can override a plaintiff’s best interests, transforming the justice system into a financial marketplace for investors.
Bloomberg’s investigation “Putin’s Billionaires Dodge Sanctions by Financing Lawsuits” reveals that foreign funders, including subsidiaries of Russia’s Alfa Group, have used litigation financing to bypass sanctions and access Western legal systems. The report showed that funders like A1 financed lawsuits in U.S. and U.K. courts both before and after sanctions were imposed, enabling hidden financial influence in sensitive jurisdictions. The Institute connects these findings to its prior research “A New Threat: The National Security Risk of Third-Party Litigation Funding,” which warns that foreign-backed TPLF can expose U.S. companies to espionage and compromise national security by allowing adversarial nations to shape American litigation outcomes.
According to its official website, the U.S. Chamber Institute for Legal Reform is an affiliate of the U.S. Chamber of Commerce dedicated to improving fairness, efficiency, and transparency in the civil justice system. It conducts research, advocacy, and educational outreach to expose lawsuit abuse, promote legal reforms, and safeguard public confidence in the rule of law. The organization’s mission is to ensure the legal system operates as a forum for justice rather than profit manipulation, helping maintain economic stability and competitiveness for American businesses.
