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Abstract

Many lawmakers who have recently become aware of the multi-billion-dollar global third-party funding industry are raising new national security concerns that further complicate preexisting, longstanding debates about transparency, disclosure, access to justice, and the best way to regulate third-party funding. In response, this Article briefly asserts three main points relating to the question of how best to regulate third-party funding. First, this Article explains the third-party funding industry, including its global regulatory landscape and how it serves three distinct populations: consumers, businesses, and law firms. Second, this Article explains that third-party funding is one tool that can help expand access to justice, but it is not a panacea. Finally, this Article asserts that lawmakers’ concerns about national security when foreign entities directly fund cases or invest in litigation funding companies primarily arise from their fear that adversaries may use third-party funding for nefarious purposes, rather than fear about the existence of third-party litigation funding itself. Therefore, Congress should not let this fear shut down the third-party funding industry or limit opportunities for this industry to improve the administration of justice. Third-party litigation funding is a global industry that routinely crosses multiple national boundaries without raising concerns. Accordingly, regulation of third-party funding in the national security context should be narrowly tailored to achieve clear goals and not be overly broad in ways that may inadvertently curtail the growth of the third-party litigation funding industry.

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