Litigation Funding

Posted on May 9, 2012 04:16 by Nathan A. Schachtman

An internet search on the phrase "litigation funding" returns thousands of hits.  There are an incredible number of companies and persons "out there" who will buy equity shares in a lawsuit.  Hedge funds are actively seeking opportunities to invest in lawsuits.

Putting aside the concerns about champerty and maintenance, I wonder whether defense counsel are doing enough to work on this issue in trials.  Assuming that these websites really are engaged in the practice they describe, shouldn't defense counsel include questions related to investments in lawsuits, in their voir dire of the jury panel?

Obviously if potential jurors owned stock in the defendant company, they would be disqualified.  Equity ownership in a chose in action surely is relevant to counsel's evaluation of a prospective juror's impartiality.  Even if the prospective juror is not invested in this particular lawsuit, the question is important.  If the investment is in the litigation generally, or in other plaintiffs' cases within the same litigation, then a jury verdict in favor of the plaintiff would likely benefit the juror by increasing the settlement value of the other cases.  Even investments in unrelated personal injury litigation, the investments have the potential to prejudice the juror against the defense.  For instance, if the juror has investments in another personal injury litigation, returning a large verdict in the present case could benefit the investment by making the company defending against the juror's chose in action believe that trying cases in the particular venue was too dangerous to risk, and those claims should be settled.

Certainly, the existence and extent of investment by others in a lawsuit should be a worthy line of discovery to conduct in mass tort litigation.

Are we doing enough to stop this insanity?

This article was first posted at the author's website on May 8th, 2012: http://schachtmanlaw.com/litigation-funding/

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Categories: Jury Selection | Torts

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