Three U.S. Senators have introduced a bill that would require transparency in third party funding in class action and multi-district litigation. It takes aim both at litigation funding and lawsuit lending, in which lending firms offer plaintiffs loans with “up-front” cash that usually come with sky-high interest rates.
The bill would introduce transparency into the litigation funding industry, which has garnered significant attention in American media recently. A New York Times investigation found an “assembly-line-like system” in which lawyers and lenders coerced women to have surgeries. A New York Post story found lawsuit lenders were charging interest rates as high as 124 percent. An executive at one of the world’s largest litigation funding firms admitted to the Wall Street Journal that litigation funders “make it harder and more expensive to settle cases.”
The bill’s introduction shows that lawmakers in the United States are taking the industry’s rapid growth seriously. As the litigation funding industry continues to grow, British lawmakers should finally do the same. The ongoing Ministry of Justice’s review of the Legal Aid, Sentencing and Punishment of Offenders Act (LASPO) offers an excellent opportunity to amend the Act and include sensible language on TPLF transparency.