The arguments for and against third-party litigation financing are based on incorrect assumptions regarding the impacts on total litigation. A formal model incorporating the choices of the plaintiff, the lawyer, and the financier shows only minimal impact on total litigation, largely positive. Yet, after addressing the potential for long-term, strategic behavior by financiers, it is obvious that some dangers remain. Divorced from the dramatic claims of proponents and opponents, litigation financing is merely a tool that can be used for good or bad, and differentiating by types of claims and the incentives of the parties allows that tool to be appropriately implemented.
Modeling the Likely Effects of Litigation Financing,
Loy. U. Chi. L. J.
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