Legal Operations » GAO Report On Litigation Funding Doesn’t Bite

GAO Report On Litigation Funding Doesn’t Bite

March 23, 2023

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A GAO report on third party litigation funding that was requested by three Republican legislators, “presumably attributable to their interest in regulating the space,” likely disappointed them, according to a post from the On The Law blog.

Summarizing the 48-page GAO report, On The Law characterizes it as a “generally helpful and balanced overview of the state of the funding industry, both from a factual and policy perspective.” Major advantages of third party litigation funding, as highlighted in the report, include that it levels the playing field for plaintiffs who otherwise couldn’t afford to file, while disadvantages include the creation of a disincentive to settlement and increasing costs for defendants. The report acknowledges the difficulty of gathering information about the practice because there is no central repository for it and, more to the point, there is no public reporting requirement for privately held funders.

That’s a big part of the problem, according to the critics. “For too long,” said Iowa Republican Senator Chuck Grassley more than two years ago, at a time when he was already pushing for disclosure of “obscure third-party litigation funding arrangements” that have “secretly funneled money into our civil justice system, without any meaningful oversight, all for the purpose of profiting off someone else’s case.”

Grassley, along with Rep. Andy Barr, and Rep. Darrell Issa, were the legislators who requested the GAO report. -Today’s General Counsel/DR

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