Litigation Funding and the Transparency Debate

Erick Robinson

Litigation funding—it's not just a financial tool; it's one of the biggest equalizers we have in today’s legal system. I mean, think about it. You’ve got individual plaintiffs, small businesses, or even groups of class-action claimants going head-to-head with these massive, resource-loaded corporate giants. Without litigation funding, many of these cases wouldn’t even make it to court. So, let’s break down why this funding is so important.

Erick Robinson

First and foremost, it levels the playing field. You’ve got these smaller entities who now actually have a chance to stand against corporations that can spend millions—no, actually, sometimes tens of millions—on their defense. Litigation funding bridges that gap by providing plaintiffs the resources they need to, like, really fight back effectively.

Erick Robinson

Then, there’s the issue of access to justice. Without funding, legitimate claims would probably go unpursued because, let’s face it, lawsuits, particularly the complex ones, aren’t cheap. And corporate defendants know this—that’s why they often play the long game, hoping plaintiffs run out of resources before they can see a case through. Funding removes some of that pressure.

Erick Robinson

Now, think about flexibility too. By securing third-party funding, plaintiffs aren’t forced to, like, overly rely on their own tight finances to cover legal costs, which may already be stretched thin. This means they don’t have to settle prematurely or compromise a case because of financial strain. Funding also allows attorneys to focus entirely on crafting the strongest possible legal argument without cutting corners due to budget issues—super important in high-stakes litigation.

Erick Robinson

And here's the thing—litigation funding isn’t just about big catastrophic lawsuits. It's also a way to spread financial risk. Plaintiffs don’t bear all the downside if a case, for whatever reason, doesn’t produce a win. Funders take on part of that risk in exchange for a portion of the upside. This dynamic provides much-needed breathing room, and honestly, it drives higher-quality representation all around.

Erick Robinson

What people also don’t realize is how funding shifts dynamics on the defendant’s side of the equation. When corporate defendants know a plaintiff is fully funded, it shifts their strategy. They’re not just thinking, "Oh, we can bully this side out of the courtroom." Instead, they have to deal with, you know, an equally resource-backed opponent. It levels the field in ways that would’ve been unheard of decades ago.

Erick Robinson

Finally, litigation funding spurs innovation in legal strategies. Funders often have experience evaluating cases with a critical lens. They only back strong claims, so this funding indirectly increases the quality of lawsuits making it to trial. And and that’s not only beneficial for plaintiffs; it actually benefits the legal system at large by reducing frivolous cases.

Erick Robinson

So to sum it up, litigation funding ensures access to justice, balances financial disparity, minimizes risks, improves strategy, and deters bullying tactics from opponents with deeper pockets. I mean, really—this isn’t just making lawsuits happen; it’s reshaping how justice takes form.

Erick Robinson

Alright, so now we shift our focus to this whole federal push for litigation funding disclosure. And let’s be clear—this isn’t something that just popped up overnight. Corporate lobbyists, insurance giants, and trade groups like the U.S. Chamber of Commerce have been hammering away at this issue for years. Why? Well, it’s not exactly about fairness and transparency, no matter how much they try to, you know, sugarcoat it.

Erick Robinson

The Judicial Conference of the United States—this is the body that oversees rulemaking for federal courts—has been a battleground for these so-called transparency efforts. For over a decade, their Advisory Committee on Civil Rules has been toying with the idea of a nationwide rule on disclosure. And and let’s not kid ourselves here—this push got a major boost in 2024 when some of the biggest corporate names you can think of—Google, Meta, Cisco, Comcast—sent a letter essentially saying, "Hey, make this a thing."

Erick Robinson

Now, the argument from their side is that disclosure prevents ethical conflicts. They claim that undetected third-party litigation funding could influence case strategy in improper ways. But here’s the kicker: they’ve got, like, no real evidence to back that up. None. Zip. It’s like they just expect us to take their word for it, which is pretty rich coming from a bunch of multi-billion-dollar companies that have more legal resources than we can count.

Erick Robinson

The reality is this push is not about transparency—it’s about power. Mandatory disclosure would force plaintiffs to reveal every detail about their funding arrangements—who’s backing them, how much money they have to work with—while corporate defendants? Oh, they get to stay shielded. Their financial arrangements stay locked up tight. I mean, does that sound fair to you? Yeah, me neither.

Erick Robinson

And the courts already have the tools they need. Judges have broad discretion to look into funding arrangements if it’s actually relevant to a case. Mandatory rules aren’t solving a problem; they’re just creating new ones. Like think about it—if plaintiffs have to risk exposing sensitive financial info, what’s that gonna do? It’s gonna make funders think twice about getting involved. Less funding, fewer resources for plaintiffs, and essentially, less access to justice. All for the sake of giving corporate defendants a strategic advantage they don’t even need.

Erick Robinson

And here’s another thing—a lot of these pushes for disclosure rely on what I’d call asymmetry. Plaintiffs get the microscope treatment while defendants sit in their ivory towers, keeping their insurance arrangements and legal budgets under wraps. That’s not transparency; that’s just gaming the system.

Erick Robinson

So, what’s the end game here? Well, if these disclosure rules take root federally, we’ll see more plaintiffs getting shut out of courtrooms altogether, not because they lack a valid claim but because they can’t get the funding they need. That’s the real cost—not to defendants, not to the system, but to people who are just trying to get their day in court.

Erick Robinson

So, let’s get into the weeds of the Litigation Funding Transparency Act of 2024—or as I like to call it, "The Let’s-Scare-Off-Plaintiffs Act." This is about as transparent as a foggy window, folks. Now, on paper, this bill mandates that any party using litigation funding in all federal civil cases has to disclose their financiers—names, agreements, all of it—to the court and other involved parties. Sounds reasonable, right? Well, not exactly.

Erick Robinson

First off, the bill’s sponsor—Rep. Darrell Issa—says it’s meant to curb foreign entities from funding lawsuits. Sure sounds patriotic, doesn’t it? But here’s the kicker—there’s nothing in the text that limits these requirements to foreign investors. It’s a blanket rule, so whether you’re funded by a Fortune 500 company or your next-door neighbor, it doesn’t matter. Everyone ends up under the same microscope.

Erick Robinson

Now, let’s talk about inconsistency in how courts have handled this issue before the clock even struck 2024. Take Delaware for instance. The District Court there has a standing order requiring disclosure of funding arrangements—everything from who the funder is to whether they have veto rights on settlement offers. Okay, fine, but here’s the deal—this one-size-fits-all rule has thrown plaintiffs into a frenzy, forcing them to think twice about seeking funding. After all, who wants their confidential agreements laying out in the open?

Erick Robinson

Then there’s New Jersey. Oh boy. The District of New Jersey has its own disclosure rule—Local Civil Rule 7.1.1—but here’s what’s wild. In 2024, their Civil Practice Committee flat-out rejected a statewide proposal for mandatory funding disclosure. They probably saw the writing on the wall. It’s just, I don’t know, bureaucracy at its best. You’d think there would be some harmony on this issue across jurisdictions, but nope, it’s like they’re all playing, uh, legal Whac-A-Mole.

Erick Robinson

And the effect? Plaintiffs everywhere are getting spooked. As soon as disclosure rules kick in, funding options shrink faster than a cheap wool sweater in a hot dryer. Because funders—shockingly—don’t love having to hand over their confidential agreements to defendants. Crazy, isn’t it?

Erick Robinson

Let’s look at a specific case: Kaplan v. S.A.C. Capital Advisors. The Southern District of New York refused to compel funding disclosure because—wait for it—the information wasn’t deemed relevant to the case. Imagine that. A ruling where logic wins for a change. Contrast that with rulings like the one in Gbarabe v. Chevron Corp. where the plaintiff had to fully disclose their funding arrangement, all because the court said it needed to know about class counsel’s “financial stability.” Yeah, because Chevron probably needed that info to sleep at night, right?

Erick Robinson

So what are the takeaways here? Beyond the obvious mess this creates? These varied—and honestly, often arbitrary—decisions make litigation funding a minefield for plaintiffs who are just trying to level the playing field. Think about it: if plaintiffs have to jump through hoops just to secure funding and then risk exposing their financial backers in every jurisdiction, how many valid cases won’t even see the light of day? A lot. And that’s exactly what corporate defendants are banking on.

Erick Robinson

And don’t even get me started on the strategic advantages this gives defendants. Actually, scratch that—let’s get into that next.

Erick Robinson

Okay, so let’s talk about the elephant in the courtroom: transparency versus confidentiality. On the surface, it kind of sounds like this noble, fair idea, right? Everyone lays their financial cards on the table, and boom—no secrets. But dig a little deeper, and it’s a whole different story. These rules are very, uh, one-sided—an asymmetry that gives corporate defendants a massive upper hand.

Erick Robinson

Here’s the deal. When plaintiffs are forced to disclose their funding arrangements, it’s not just some harmless transparency exercise. They’re essentially being asked to hand defendants a map. Who’s backing them, how deep those pockets run, what kind of leverage they might have—all critical info that plaintiffs absolutely did not sign up to share.

Erick Robinson

And you’re probably wondering—don’t the courts already have the tools to, you know, ensure fairness? The answer is, yeah, they totally do. Judges already have plenty of discretion to dig into funding agreements if they think it’s actually necessary for the case. No broad mandates are needed here. But the push for these mandatory rules? It’s not about necessity—it’s about creating barriers for plaintiffs. Plain and simple.

Erick Robinson

Now, if we step back for a second and think about the broader impact, it’s clear who loses in this game. Plaintiffs, especially the ones who need funding the most, are stuck between a rock and a hard place. Go after well-funded defendants without the resources to keep up? Good luck. But seek funding and risk everything being out in the open? Suddenly, funders are like, "Yeah, no thanks." Who’s gonna want to invest when their entire playbook could be exposed?

Erick Robinson

But here’s the kicker—corporate defendants don’t even come close to facing the same level of scrutiny. There’s no rulebook forcing them to spill on how their defense teams are funded. Insurers, internal budgets—none of that has to see the light of day. And that’s not just unfair—it’s deliberate. It’s about locking plaintiffs into a weaker, vulnerable position while defendants keep all their cards close to the chest.

Erick Robinson

And let’s not forget the folks advocating for litigation funding itself. These are the people saying, "Hey, we need to protect fair access to justice." They know how crucial funding is for plaintiffs standing up to these corporate Goliaths. And they argue—rightly so—that funding disclosure should only ever happen in, like, extreme cases where it’s actually relevant. Not as some blanket requirement just to please, what, corporate lobbyists?

Erick Robinson

So it boils down to this: mandatory disclosure doesn’t create fairness. What it does—it tilts the scale even further in favor of defendants who already have the upper hand. And really, isn’t the whole point of litigation funding to level that scale in the first place?

Erick Robinson

So, here we are at the big finish, and in case it wasn’t clear before, let me spell it out: mandatory disclosure of litigation funding isn’t about transparency—it’s about tipping the scales against plaintiffs. You’ve got corporate defendants—some of the wealthiest entities on the planet—shouting "fairness!" while they sit back and strategize how to choke off access to justice. It's, honestly, kind of transparent—and not in the way they want you to think.

Erick Robinson

Let’s not forget the real consequences here. When plaintiffs are forced to open their financial playbooks, funders start backing away, and cases that deserve their day in court? Well, they end up dead on arrival. And and who wins in that scenario? The very defendants who were hoping funding would dry up in the first place.

Erick Robinson

And look, courts already have the tools to address potential issues. Judges can review funding arrangements if and when they’re actually relevant to the case. This whole idea of a blanket disclosure rule? It’s redundant at best and downright punitive at worst. If you’re serious about fairness, start by applying the microscope to both sides. But we all know corporate defendants aren’t about to volunteer their legal budgets or their insurer agreements, are they? Yeah, didn’t think so.

Erick Robinson

So, my takeaway here is pretty straightforward. If we care about access to justice—about giving plaintiffs the chance to hold powerful corporations accountable—then these disclosure mandates have absolutely no place in our legal system. Instead, we should be focusing on policies that protect and encourage funding, not scare it away with overreaching rules and misplaced priorities.

Erick Robinson

And you know what really bugs me? Litigation funding isn’t just some ATM for lawsuits—it’s a cornerstone of holding the powerful to account. It’s how the scales stay balanced when David goes up against Goliath. Without it, we’re leaving the courtroom doors wide open only for those who can afford the price of entry, and that, my friends, is not justice at all.

Erick Robinson

So on that note, let’s call it a wrap. Thanks for tuning in, and as always, I hope you’re leaving a little more informed—and maybe just a bit more skeptical of the "transparency" pitch we keep hearing. Until next time, stay sharp out there.