Litigation Funders Push Back Against In-House Lawyers' Call for Disclosure
Their message follows a letter by a group of 30 current and former top lawyers at major companies including Google, Verizon Wireless and AT&T Inc., who back a proposed measure that would require full disclosure of third-party funding agreements in civil actions.
February 21, 2019 at 12:49 PM
4 minute read
Litigation funders have responded forcefully to a group of in-house lawyers who are asking for more fulsome disclosures of third-party funding in federal litigation.
A group of 30 current and former top lawyers at major companies including Google, Verizon Wireless and AT&T Inc. signed onto a letter last month backing a proposed amendment to Federal Rules of Civil Procedure 26(a)(1)(A) that would require the full disclosure of third-party funding agreements in civil actions.
In response, leaders from three major litigation funders Wednesday fired off their own letter to the committee at the Administrative Office of the United States Courts, which is considering the proposed changes. They call the in-house lawyers' letter ”a PR stunt” by the U.S. Chamber of Commerce's Institute for Legal Reform, which has sought to reign in the litigation finance industry. The in-house counsels' request, the funders wrote, amounts to “a push for forced disclosure of irrelevant information that one party is simply curious to know.”
“The instances in which federal courts have permitted discovery into litigation funding arrangements are exceedingly rare; they arise only under unique circumstances where they are, in fact, germane to the claims and defenses of the parties,” wrote the group of funders—Eric Blinderman, the CEO of Therium Capital Management Ltd. in the U.S., Allison Chock, the chief investment officer of Bentham IMF, and Danielle Cutrona, director, Global Public Policy of Burford Capital. “The call for blanket forced disclosure under Rule 26 flies in the face of these bedrock relevance principles, and thus, should be viewed with great skepticism by the Advisory Committee.”
The courts, they wrote, already have the ability to probe funding arrangements when parties have shown that they are relevant to the underlying dispute. They point out that U.S. District Judge Dan Polster of the Northern District of Ohio, who is overseeing the multidistrict litigation against opioid makers, has ordered counsel in that case to submit descriptions of any third-party funding for in camera review, and declarations that funding hasn't created conflicts. The litigation funders labelled it “blatant hypocrisy” that the Chamber would call for the disclosure of private transactions while protecting the privacy of its own donor list.
Writing separately, Burford CEO Christopher Bogart claimed that 90 percent of Am Law 100 law firms and major companies, including signatories to last month's letter, are Burford clients. One company that signed on to the letter, he wrote, had approached Burford about litigation funding in the weeks since the in-house counsel sent their letter.
“Why, then, the apparent dissonance of corporate counsel signing the Chamber's letter while also using our capital?” Bogart wrote. “The simple answer is the bare-knuckled tactics of the Chamber, not merely in its political lobbying, but also in managing its members, for whom it is easier to sign on publicly rather than to refuse to go with the flow.”
The letters come just a week after group of Republican U.S. senators reintroduced legislation that would require plaintiffs to disclose when they've secured third-party funding in litigation.
Lisa A. Rickard, the president of the U.S. Chamber Institute for Legal Reform, said in a statement supporting the bill that Congress “sees the dangers that secretive lawsuit funding deals pose to fairness and justice in our courts.”
“It's time for the lucrative business of betting on other peoples' lawsuits to get examined in the light of day, and the Litigation Funding Transparency Act will do just that,” she said.
Read the three funders' letter:
Read Bogart's letter:
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