US Chamber of Commerce undermines business interests in push for mandatory disclosure of litigation funders
LOS ANGELES, June 5, 2017: On June 1, 2017, The US Chamber of Commerce submitted a letter to the Committee on Rules of Practice and Procedure to force mandatory disclosure of litigation finance. In submitting the letter, which renews the 2014 petition to the Committee on the same subject, the Chamber proves once again that its true motives run counter to many of the lofty pro-business, pro-innovation goals that it touts. Three full years after filing the original petition, the Chamber is unable to assert any new reasons for reconsideration of its request, save for the growth of the litigation finance industry. “It is ironic that the industry growth which the Chamber identifies as justification for the renewed petition seeking mandatory disclosure of litigation finance actually proves how funding is serving a need: namely, facilitating access to an expensive legal system that otherwise only the most well-moneyed players are able to afford,” said Allison Chock, Bentham IMF’s Chief Investment Officer.
The contradictions in the Chamber’s positions on litigation finance compared with its stated objectives to promote “fair, efficient and innovative capital markets,” and to fight “for the kind of financial rulemaking that protects consumers and investors, encourages reasonable risk taking, [and] doesn’t constrain innovation and growth,” (see https://www.uschamber.com/financial-regulation) belie its true motives. “It seems the only interests the Chamber is really trying to protect are those belonging to its big business members, who are eager to retain an advantage they typically enjoy in high-stakes commercial disputes: superior financial resources to litigate,” said Ms Chock. “Providing a level of financial parity for the parties enables disputes to be decided on their true legal merits,” she continued.
Although the Chamber cites the increase in the use of litigation finance by law firms as a cause for alarm, the reality is that those law firms are, in most cases, using such financing to serve precisely those same underserved and underfunded clients — small-to-mid-size businesses and individuals — who cannot otherwise afford to pay a top-tier law firm on an hourly-fee basis to litigate their claims. “The fact of the matter is, the larger the potential damages and more complicated the case, the harder it is to win. Commercial litigation finance allows all plaintiffs with strong, meritorious claims access to the tools necessary to hold wrongdoers accountable for their actions in court,” Ms Chock added. “What we’re seeing in the Chamber’s latest petition is prioritization of big-business interests and an attempt to protect the Chamber’s largest and most profitable members from legal accountability under the guise of protecting the public from ‘third parties interested solely in profit.’”
The Chamber’s proposed rule is also unfairly one-sided. If a plaintiff must disclose the terms, amount, and source of its financial backing for its lawsuit, a truly balanced approach would require defendants to make similar disclosures, including how much they can or intend to spend on the case, their own legal departments’ annual internal and external counsel budgets, their law firms’ projected budgets for the case, hourly billing rates, and the like. “Upon looking more closely at the Chamber’s petition, it becomes clear that a proposed rule change requiring mandatory disclosure of litigation finance should, once again, be rejected by the Committee,” said Ms Chock.
About Bentham IMF
Bentham IMF is the U.S. arm of publicly listed IMF Bentham Limited (ASX: IMF), one of the most successful litigation funding companies in the world, with a portfolio that has a total claim size value of $3.3 billion AUD. Together, our companies have 11 offices throughout the U.S., Australia, Canada and Asia and provide funding to clients in jurisdictions including the U.S., Australia, Canada, New Zealand, Hong Kong and Singapore. We have reviewed thousands of commercial cases in the past 16 years, funding to completion more than 157 cases and generating over $2 billion AUD in recoveries. We have achieved a 90% success rate, with clients utilizing our funding retaining an average of 63% of all case proceeds.