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As the concept of alternative litigation financing begins to take root in American jurisprudence, the legal community is increasingly thirsty for information about this subject.  JAMS, the largest private alternative dispute resolution firm in the world, recently invited Bentham IMF’s Ralph Sutton to present the keynote address to JAMS Annual Owners Meeting on May 2, 2014 at the St. Regis Hotel, Bal Harbour.  The JAMS owners are typically former state and federal trial and appellate judges who are among the most successful neutrals in the country.

Ralph gave this group of nearly 100 a succinct overview of litigation funding structures and history.  His talk also provided context on the involvement of third parties in the US legal system from contingency fee arrangements (an exception to traditional champerty), which began in the 18th century, to the advent and acceptance of liability insurer control over litigation and settlement (an exception to traditional maintenance), in the late 19th century, to the present uses and need for litigation finance today.   Ralph noted the many parallels between “protection from loss” provided by insurance and “help with  recovery of loss” provided by litigation finance.  A slide providing a side-by-side comparison of once controversial contingency fee and insurance arrangements with litigation finance is attached, illustrating the points elegantly.

The presence of litigation funding, of course, equalizes the playing field and allows small and medium size American companies to fight larger, deep-pocket defendants practicing scorched earth tactics.  The cases are resolved on their merits, not based on financial strength, just as it should be.

Accepted Third Party Involvement in US Litigation

	Contingency  (1700s)	Insurance  (1800s)	Litigation Funding  (today)
Similarities:	Exception to champerty	Exception to maintenance	Exception to champerty
	Binary:  Client and counsel	Triangle: client, counsel and carrier	Triangle: client, counsel and funder
	Aid plaintiff to recover loss	Protect defendant from loss	Aid plaintiff to recover loss
	Front fees and costs	Pay fees and costs	Invest fees and costs
Differences:	Control over litigation	Control over litigation	No control over litigation
	Input on settlement	Control over settlement (within policy limits)	Input on settlement
	Impose guidelines on lawyers	Impose guidelines on lawyers	No right to audit or impose guidelines

www.jamsadr.com