US Chamber of Commerce undermines business interests in push for mandatory disclosure of litigation funders

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.