When a Litigation Funder Enters the Picture, Control over Litigation Strategy Remains with the Claimant and Lawyer

For those considering litigation funding, fear over the issue of whether acceptance of funding equates to relinquishment of control over litigation strategy is unfounded. Generally, reputable third-party funders exercise no control over litigation strategy. Litigation funding is just that — funding. A funder provides financing to help attorneys and clients pursue meritorious claims and, in return, receives a return on its investment from the proceeds of successful verdicts or settlements.

There are ethical rules funders and lawyers must be mindful of that prevent a third party from directly influencing case strategy. Under those rules, lawyers must make independent decisions that are in the best interests of their clients. “It’s a paramount issue that state bar associations worry about, “observes Los Angeles Investment Manager Allison Chock. “We’re very cognizant of this…and we operate in the most conservative ways to avoid conflicts.”

That said, litigation funders can serve as a strategic sounding board for the attorneys and claimants they finance. Advice is one of the benefits of using a litigation funder like Bentham, which is staffed with lawyers who have deep experience in all phases of litigation. They can serve as a resource for a litigator who needs an objective view.

Chock notes that funders also serve as a resource and a benefit. “Those who have used us in this way appreciate the unemotional view of their case we can bring from the 30,000-foot level. We’re less involved in the day-to-day of a case and can provide an objective point of view.” San Francisco Investment Manager Matt Harrison concurs and stresses that the advice is optional for those who have received funding.

While funders do not have a right to control litigation strategy, funders do have the right to stay informed about the progress of the case. This is a far different approach than with insurers, who “exert a lot more control,” says Harrison. “Counsel for an insurer will get highly involved in strategy and even in editing briefs.” But that doesn’t mean the funder is getting involved in the complexities of a particular matter or directing motion or discovery practice. Chock and Harrison confirm funders are “not in the weeds.”

To learn more about funding options in cases or about how the funding process works, contact us for a consultation.