It's about Time: A System Thinking Analysis of the Litigation Finance Industry and Its Effect on Settlement

Abstract

The developing litigation finance industry is applauded by those who champion its access-granting and bargaining-power-equalizing functions for low-income plaintiffs in civil suits, and derided by those who warn of its unsavory business practices and interference with settlement efforts. With no current body of law adequately addressing the potential problems this burgeoning industry creates, it is vital to develop an approach to litigation finance that protects both the integrity of the settlement process and consumer interests. Such an approach simultaneously must avoid excessive regulation that effectively hinders court access by precluding disadvantaged plaintiffs with viable claims from having their days in court. Applying systems thinking to the field of litigation finance and its effect on settlement reveals a simple objective that would best achieve the necessary balance between this new field’s angels and demons: reducing the time delay currently plaguing civil courts. Part I of this Comment explores the general structure, history, and current status of litigation finance, identifying the circumstances that stimulated its creation and describing its prototypical operation. Part I also briefly reviews existing legal doctrines that have been, or could potentially be, used to regulate litigation finance, including champerty, usury, and contract law. Part II examines the widely diverging viewpoints about the litigation finance industry, focusing in