Discovery Trends in Litigation Finance Arrangements

With the rise in third-party litigation funding, questions have been raised as to the arrangements, including their legality, practicality, terms and — importantly for investors wishing to remain behind the scenes — the extent to which the arrangements must be disclosed. As more lawsuits are funded by third parties, courts have been faced with novel discovery questions. Those include whether and to what degree discovery is appropriate with respect to the parties involved in the litigation funding, the specific funding arrangements and the information provided to funders to aid in their assessment of the potential investment. Currently, there are few rules that specifically address disclosure of litigation funding arrangements, leaving courts to deal with disclosure questions on a case-by-case basis. The results sometimes have been conflicting, as partner William Gussman, associate Hannah Thibideau and former Schulte lawyer Alan Glickman discuss in this article.