Litigation Funding Research Articles

Strategic enforcement of anti-discrimination law: A new role for Australia's equality commissions

In Australia, anti-discrimination law is enforced by individuals who lodge a discrimination complaint at a statutory equality commission. The equality commission is responsible for handling complaints and attempting to resolve them. In most instances, the equality commission cannot advise or assist the complainant; it must remain neutral. In other countries, the equality commission plays a role in enforcement, principally by providing complainants with assistance to resolve their complaint including funding litigation. The equality commission's assistance function has been most effective when used strategically as part of a broader enforcement program, rather than on an ad hoc basis. This article discusses equality commission enforcement in the United States of America, Britain, Northern Ireland and Ireland and shows how the equality commissions in those countries have engaged in strategic enforcement in order to develop the law and secure remedies which benefit the wider community, not only the individual complainant. Based on their experience, it is argued that the Australian equality commissions should play a role in enforcement so that they can tackle discrimination more effectively.

Three aspects of litigation funding

This comment reviews three decisions of the Supreme Court of Ireland from the last three years which concern different aspects of litigation funding. Persona Digital Telephony Ltd v Minister for Public Enterprise is about the direct provision of financial support for litigation, something which the Supreme Court invalidated as contravening the ancient principles of maintenance and champerty. In SPV Osus v HSBC Institutional Trust Services the Supreme Court unsurprisingly struck down an assignment of a right to litigate as also savouring of maintenance and champerty. Finally in Moorview Development Ltd v First Active plc the Supreme Court considered when a third party supporting litigation in circumstances not covered by Persona Digital might be required to pay the costs of the defendant should the litigation supported be lost. Persona Digital is a decision of mainly Irish significance, but the other decisions have implications for the wider common law in relation to two matters. The first is whether the difference between financing a claim and buying it is more than a matter of form. The second is the appropriate approach of courts wherever situated to making a non-commercial funder of civil litigation liable to pay the costs of an opposing litigant.

Third-Party Funding(제3자 자금지원)의 가능성과 규제 방안

근래 들어 중재 등 분쟁해결산업의 팽창과 함께 ‘제3자 자금지원(third party funding 또는 litigation funding)’ 제도가 빠르게 발전하고 있다. 일각에서는 제3자 자금지원 제도가 고비용의 소송 또는 중재의 해결책으로서 당사자들의 사법 접근성을 향상시킨다고 예찬하고, 다른 편에서는 자본이 분쟁해결에 부당하게 개입하면서 당사자의 이익을 해하고 당사자에게 돌아가야 할 배상금을 잠탈한다는 부정적인 시각을 드러낸다. 그러나 제3자 자금지원은 “부인할 수 없고 중요한 현실”이라는 진단이 점차 주류를 형성하고 있다.BR 보통법계(common law) 국가에서는 제3자의 소송원조를 범죄이자 불법행위로 보는 ‘maintenance and champerty’라는 법원칙이 오랜 기간 제3자의 금전적 소송개입을 금지하는 역할을 수행하였다. 그러나 호주, 영국, 미국 법원들에서 제3자 자금지원을 허용하는 취지의 판결들이 속속 나오고 있고, 최근 싱가포르와 홍콩에서는 적극적으로 중재절차에서 제3자 자금지원을 허용하는 취지의 입법까지 하였다. 현재 우리나라 내에서는 제3자 자금지원이 허용되는지에 그 논의가 머물러있는데, 특히 법적 장애물로 거론되는 것은 비변호사의 법률사무를 통한 이익분배를 금지하는 변호사법 규정과 이자제한법이다. 외국의 사례까지 검토하여 보면, 위 법규가 제3자 자금지원을 전면적으로 금지하는 방향으로 작동하지는 않을 것으로 보인다. 그러나 일정한 한계선을 제시할 것은 분명하다.BR 이제는 논의의 방향을 허용 여부 보다는 얼마만큼 어떠한 방식으로 규제할 것인가로 옮겨갈 필요가 있다. 소송당사자의 권익 보호와 그 제도의 남용 방지를 위해 연구를 통한 적절한 가이드라인이 형성되어야 한다. 무엇보다 자금지원자의 소송개입은 어디까지 허용되고 통제되어야 하는지, 여러 이익충돌 상황을 예방하기 위해서라도 자금지원자의 정보가 의무적으로 공개되어야 하는 것은 아닌지, 자금지원자에게 소송비용을 부담시킬 수 있는지 및 자금지원을 이유로 당사자에게 소송비용 담보제공 명령을 할 수 있는지에 관하여 어려운 논점들이 남아있는데, 그 논의의 기반을 위해 본 논문은 외국의 판례와 중재판정례, 입법례와 중재기구 규칙, 국제규범 등을 살핀다. 특히 ICCA와 퀸메리 대학의 공동 TF에서 초안한 「제3자 자금지원에 관한 원칙(ICCA-Queen Mary Task Force Principles on Third-Party Funding)」과, 미 연방사법센터(FJC)에서 발간한 ‘제3자 소송 자금지원(Third-Party Litigation Finance)에 관한 포켓 가이드’가 이에 참고가 된다.BR 제3자 자금지원의 적절한 활용은 중재산업의 부양과 소송제도의 발전의 동력이 될 수 있다. 본 연구는 이를 위해 국제적 동향을 분석하고 방향성을 제시함을 목표로 한다.

The Forgotten Brown Case: Briggs v. Elliott and Its Legacy in South Carolina

ABSTRACT There is not much debate regarding the Brown decision and the significance of the foundation it provided for access to equal educational opportunity and the school funding litigation movement; however, it is important to recognize that the inception of Brown can be traced back to a small rural town in South Carolina. Three years before the Supreme Court heard Brown v. Board, the legal strategy to attack separate but equal was formed in Summerton, South Carolina, with Briggs v. Elliott. Briggs was the first school funding lawsuit in South Carolina. More than 65 years after the first school funding lawsuit was filed in the state of South Carolina, rural school districts are still waiting for the state to provide adequate educational opportunity for poor, rural, mostly Black students. The schools in these districts are arguably still segregated, still unequal, and still inadequate. The purpose of this article is to examine the history and legacy of Briggs v. Elliot. The article begins with exploring the historical legal background of education finance litigation in South Carolina. This is followed by a snapshot of the prevalence of school segregation and educational inadequacies of the rural school districts represented in Briggs and recent lawsuits. Furthermore, the article discusses the role and function of the courts regarding South Carolina education, in addition to enacted legislation and the role of race. The article concludes with implications regarding policy and potential future legal strategies.

Competition Damages Claims in Ireland: The Damages Directive Improves the Irish System Though Obstacles Remain

The Damages Directive and the implementing Irish legislation apply to infringements of EU (and Irish) competition law that occurred on or after 27 December 2016. Irish litigation rules were already well developed but the Directive will augment and add to the Irish rules on disclosure, the effect of national decisions on competition law, limitation periods, joint and several liability, quantification of harm, passing-on of overcharges and consensual dispute resolution. However, obstacles remain to bringing competition damages claims in Ireland. In particular, the absence of any class action system and litigation funding coupled with the lack of any real history of such claims will limit the ability to bring such actions in Ireland.

Contracting on litigation

AbstractTwo risk‐averse litigants with different subjective beliefs negotiate in the shadow of a pending trial. Through contingent contracts, the litigants can mitigate risk and/or speculate on the trial outcome. Contingent contracting decreases the settlement rate and increases the volume and costs of litigation. These contingent contracts mimic the services provided by third‐party investors, including litigation funders and insurance companies. The litigants (weakly) prefer to contract with risk‐neutral third parties when the capital market is transaction‐cost free. However, contracting with third parties further decreases the settlement rate, increases the costs of litigation, and may increase the aggregate cost of risk bearing.

The Need for a Federal Anti-SLAPP Law in Today’s Digital Media Climate

This Note lays out the judicial protections granted to the traditional press and identifies new threats to non-traditional presses through the rise of third-party litigation financing for lawsuits targeting negative reporting. Part I distinguishes between libel and privacy lawsuits, explaining why one approach—particularly in the digital age—can be more fruitful for plaintiffs. Part I also draws from recent Supreme Court precedent to contextualize current attitudes regarding speech and privacy. Part II analyzes two recent new media cases with troubling results: specifically, million-dollar costs at best, and bankruptcy at worst. While ample protections exist for the traditional press, in light of these lawsuits, it is worth considering what more could and should be done to protect media outlets, especially the non-traditional presses. Part II also examines the chilling effect of potential billionaire-backed lawsuits. Because of threats from third-party litigation financiers and because judicial protections are intended for traditional presses, new publishers are left in a precarious position; Part III advocates for a federal anti-SLAPP law as a potential solution.

Auctioning Class Action Representation

Class actions feature severe agency problems, resulting from divergence of interests between class members and the class attorney. This paper proposes a novel mechanism for selecting the class attorney and aligning her interests with those of the represented class. The mechanism applies a combined percentage and hourly litigation fee structure, in which lawyers earn a percentage of the class’ common fund, and bear the same percentage over their time investment. To guarantee a maximum expected payoff for the class, we supplement this fee structure with a preliminary auction, in which the role of the lawyer is tendered using competitive bidding. We propose an auction mechanism which elicits bids equal to the net expected value for the class and extracts all rents from lawyers. We then extend the model and apply the proposed mechanism to litigation funding, and to alternative fee-shifting rules.

An Evidence-Based Approach to Class Action Reform in Australia: Common Fund Orders, Funding Fees and Reimbursement Payments

The public release of the ALRC’s final report on class actions and litigation in late January 2019 was accompanied by the announcement by the Federal Attorney-General that, over the next two months or so, he will seek the views of stakeholders with respect to the 24 recommendations contained in this report. It is, of course, important that these consultations and assessments of the ALRC’s recommendations be based on an accurate understanding of the actual, as opposed to perceived, operation of Australia’s class action regimes. One of the two aims of this third report - in the An Evidence-Based Approach to Class Action Reform in Australia series - is to secure this desirable scenario with respect to two of the most controversial aspects of Australian class actions: (a) the percentages of class action settlements that are paid to commercial litigation funders with respect to their commissions or funding fees; and (b) the impact that the ground-breaking common fund doctrine enunciated by the Full Federal Court in October 2016 has had on the remuneration received by funders in successful class actions. The other purpose of this report is to provide data with respect to what are rapidly becoming common features of class action settlement agreements: what are generally-referred to as reimbursement payments to lead plaintiffs and occasionally to sub-group representatives and active/sample class members.

An Economic Analysis of Third Party Litigation Funding

An Economic Analysis of Third Party Litigation Funding

The Conundrum of Competing Class Actions and the Efficiency Question

There is an increasing phenomenon of competing class actions – class actions purporting to cover the same or nearly the same common issues of alleged wrongdoing but brought by different representative parties (or “lead applicants”) with different lawyers and often different litigation funders. A decision by a court allowing one class action to proceed (with, presumably, one set of lawyers acting) while staying all others is significant and raises a number of matters that deserve consideration. Court and economic efficiency are key among these though they can point to two answers. Efficiency can be produced by economies of scale and lack of duplication (favoring one proceeding) but also by rivalrous competition (favoring more than one proceeding). If litigation has attributes of 'natural monopoly' then efficient franchise bidding through the former may be the preferred solution for trying the common issues stage, though not necessarily the second stage of trying individual issues.

How Do the Fiduciary Duties of Solicitors and Issues of Conflict of Interest Impact on Class Actions and Litigation Funding?

How Do the Fiduciary Duties of Solicitors and Issues of Conflict of Interest Impact on Class Actions and Litigation Funding?

Arbitrating Disputes in Third-Party Funding: A Parallel With Arbitration in the Financing Sector

The topic of Third-Party Funding in international arbitration has been almost exhaustedly debated. However, little -- if any -- relevance has been given to the use of dispute resolution mechanisms in the context of litigation financing. It can be said that the litigation financing is a financing, and therefore there is not much else to explore given the work that has already been done in regards to the use of arbitration (and other dispute resolution means) within this realm. In any case, one can ask whether the litigation financing industry has particular features that need to be looked at, or if there are specific kinds of disputes that arise in this context. This article endeavours to capture those nuances that the litigation financing may pose when faced with a dispute and argues that, in very same vein as the finance and banking sector, arbitration is the best means to solve disputes.

Third-Party Funding in International Arbitration: Useful Experience from Australia

Australia is renowned as a leading jurisdiction for litigation funding, underpinned by an expanding market and generally supportive legislature and judiciary. Less clear is the Australian approach to third-party funding in international arbitration. In an exploration of the Australian litigation funding landscape, this article seeks to understand whether any lessons can be gleaned in addressing the growing role of third-party funding in international arbitration.Through a consideration of the discrete issues of disclosure, confidentiality, costs orders, and security for costs, it is clear that both the Australian and international responses to litigation funding offer valuable guidance on issues surrounding third-party funding in international dispute resolution.

Access to justice in international courts for indigent states, persons and peoples

Funding and litigation finance is an important aspect of international adjudication. The growing literature on courts and tribunal has however overlooked the subject of litigation cost and finance. This paper considers the development of the practice of trust funds that aid access to international courts and tribunals for states as well as corporate and natural persons. Next, the paper addresses strategies to increase access to justice by poorer developing states and indigent persons. The paper evaluates the means by which further confidence in the adoption of international adjudication, arbitral routes and other appropriate dispute resolution routes may be promoted among poorer parties in order to reduce the deleterious effects of acute financial inequalities between litigants and other participants. In order to exhaustively deal with this issue of litigation financing the paper will, therefore, compare the relevant law and processes of the International Court of Justice, the Permanent Court of Arbitration, the International Tribunal for the Law of the Sea, the European Court of Human Rights, the various International Criminal tribunals, the World Trade Organisation and the International Centre for Settlement of Investment Dispute.

Mechanics of Third-Party Funding Agreements:A Funder’s Perspective

This article aims to provide an overview of the issues associated with a litigation funding agreement (LFA) governing the non-recourse financing of an arbitration case. It covers the key items relevant when structuring a litigation funding transaction, from understanding what drives the financial terms to performing due diligence on the merits of the case and designing the sophisticated contractual framework required to deal with the interests of the various stakeholders.

The International Experience on and a Relative Analysis of the Regulation over Third Party Funding of Dispute Resolution

Considering the potential adverse effects on litigation and arbitration caused by Third Party Funding, some countries and regions have tried to regulate it. England and Wales has adopted a self-regulation approach, which has two loopholes. The first one is the over-favoring of the interest of the Third Party Funding industry. Consequently, some critical issues such as information disclosure are not fully addressed by the ALF Code. The second one is that the binding effect of ALF Code is limited to ALF’s member companies. The court-directed regulatory approach adopted by Australia effectively resolves the problems caused by Third Party Litigation Funding. However, the problems caused by Third Party Arbitration Funding, such as arbitrators’ conflict of interest, remain to be unsolved. The limited but targeted regulation” newly developed by Singapore tries to achieve a delicate balance between cautiousness and flexibility. At the outset, Third-Party Funding will only be permitted for international arbitration proceedings, which reflects the cautious aspect of the approach. The flexible aspect of the approach embodies in the multiple tiers of legislation. The Civil Law（Amendment）Act clarifies that the common law tort of maintenance and champerty is abolished in Singapore. Meanwhile, the specific regulatory measures are authorized by the Act to subsidiary legislation of the Ministry of Law, who can adjust its regulatory measures corresponding to the temporary features and problems of the Third Party Funding industry. The light touch” approach adopted by Hong Kong resembles but exceeds the self-regulation of England and Wales in three ways. Firstly, the new Arbitration Ordinance drafts a framework for the code of practice, taking into account the protection of the interest of the funded party and the achievement of access to justice. Secondly, the new Arbitration Ordinance encourages the funder to comply with the code of practice by clarifying the liability for breach of the code. Thirdly, the funded party is obliged to disclose relevant information in the arbitration proceeding. Bearing in mind the contribution of Third Party Funding to the achievement of access to justice and to the improvement of regional governance by law, it is necessary to promote the use of Third Party Funding in mainland China. Theoretically, there is no legal constraint to the development of Third Party Funding in mainland China, although there are some doubts to its legality. In practice, both typical and derivative Third Party Funding has been employed in mainland China. However, neither the legislation nor the judicial practice has responded to the potential adverse effects caused by third party litigation funding and third party arbitration funding, leaving their development without any regulation. Mainland China should legalize the use of Third Party Funding to international arbitration right now. Third Party Funding to domestic arbitration or litigation may be legalized in future, depending on its performance in the international arbitration sphere.

An Evidence-Based Approach to Class Action Reform in Australia: Closed Class Actions, Open Class Actions and Access to Justice

In May 2018 the Australian Law Reform Commission (“ALRC”) released a discussion paper on class action proceedings and third party litigation funders. It contained the proposal that the federal class action legislation should be amended to provide that all federal class actions should be initiated as open class actions. I have reviewed the descriptions of represented groups - provided in the originating applications and statements of claim - with respect to all the federal class actions filed before 30 September 2018. In this report I will provide some of the major data and findings that have emerged from this review, in the hope that it will be of some assistance - to the ALRC, the Commonwealth Attorney-General and/or other interested persons and entities - in determining whether the ALRC’s proposal, that all federal class actions should be commenced as open class actions, should be retained in the ALRC’s final December 2018 report and, if so, in identifying the major issues and challenges that will need to be addressed in implementing this recommendation as well as its likely impact.

Risk aversion as risk-neutral pessimism: A simple proof

It has long been understood that risk aversion reduces the likelihood of suit. This article offers a simple proof that risk aversion is observationally equivalent to risk-neutral pessimism by applying a change of measure to risk-neutral probabilities. The observational equivalence of risk aversion to risk-neutral pessimism may provide a useful framework for proving results in the study of several areas of interest, including (1) the role of risk-transfer mechanisms like contingency fees and litigation funding; (2) calls for prohibitions on, or judicial participation in, plea bargains; and (3) broader judicial review of the fairness, reasonableness, and adequacy of settlements in individual (that is, non-class) civil actions.

IP Privateering in the Markets for Desktop and Mobile Operating Systems

Utilizing a privateering competitive strategy, firms sponsor the assertion of IP claims by third parties (patent assertion entities and others), with the ultimate objective the raising of rival competitors’ costs. This paper tells the privateering story with respect to both desktop and mobile operating systems competition. It begins with Microsoft’s funding of litigation against Linux – a threat to Microsoft’s desktop operating system monopoly and continues to a analysis of recent competition in the smartphone space. The paper raises potential competitive concerns and related antitrust and IP enforcement issues.