Third-Party Litigation Funding and Claim Transfer
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ConferenCe ProCeedings Third-Party Litigation funding and Claim Transfer Trends and implications for the Civil Justice system Geoffrey McGovern • Neil Rickman • Joseph W. Doherty • Fred Kipperman Jamie Morikawa • Kate Giglio This conference was convened by the UCLA-RAND Center for Law and Public Policy. The conference and these proceedings were made possible by the generous support of Juridica Capital Management Limited, Burford Advisors LLC, Patton Boggs LLC, Oxbridge Financial Group LLC, IM Litigation Funding, and supporters of the UCLA-RAND Center for Law and Public Policy. The RAND Corporation is a nonprofit research organization providing objective analysis and effective solutions that address the challenges facing the public and private sectors around the world. RAND’s publications do not necessarily reflect the opinions of its research clients and sponsors. R® is a registered trademark. © Copyright 2010 RAND Corporation. Portions of this document, the presentations entitled “Fee Regimes” and “Litigation Markets and Litigation Accuracy,” are used by RAND under license from the copyright owners. Permission is given to duplicate this document for personal use only, as long as it is unaltered and complete. Copies may not be duplicated for commercial purposes. Unauthorized posting of RAND documents to a non-RAND Web site is prohibited. RAND documents are protected under copyright law. For information on reprint and linking permissions, please visit the RAND permissions page (http://www.rand.org/publications/ permissions.html). Published 2010 by the RAND Corporation 1776 Main Street, P.O. Box 2138, Santa Monica, CA 90407-2138 1200 South Hayes Street, Arlington, VA 22202-5050 4570 Fifth Avenue, Suite 600, Pittsburgh, PA 15213-2665 RAND URL: http://www.rand.org To order RAND documents or to obtain additional information, contact Distribution Services: Telephone: (310) 451-7002; Fax: (310) 451-6915; Email: [email protected] Preface On June 2, 2009, the UCLA-RAND Center for Law and Public Policy convened a conference in Santa Monica, California, on third-party litigation funding and claim transfer. The UCLA- RAND conference was the first ever in the United States to address this topic. The conference brought together members of academia and the nonprofit sector, stakeholders from the legal industry (including representatives from plaintiff and defense firms), and leaders from the liti- gation finance industry to discuss this field of finance and explore its implications for the civil justice system of the United States and other countries. These UCLA-RAND conference proceedings summarize the key issues presented by the panelists and speakers. Supplemental materials, including briefing slides and invited papers and speeches that were written in advance and distributed at the conference, are included, unedited, in two appendixes. This volume should be of interest to participants in the legal services industry, as well as researchers and policymakers who examine the business aspects of litigation and effects of litigation finance on issues of social concern. The conference and these proceedings were made possible by the generous support of Juridica Capital Management Limited, Burford Advisors LLC, Patton Boggs LLC, Oxbridge Financial Group LLC, IM Litigation Funding, and supporters of the UCLA-RAND Center for Law and Public Policy. The mission of the UCLA-RAND Center for Law and Public Policy is to inform legal and public policymakers with innovative legal scholarship grounded in multidisciplinary empirical analysis. The center fosters collaborative research, holds conferences, and trains law students in the Empirical Legal Scholars program. It is the first center of its kind to create a partnership between a law school and a major nonprofit research institute. Founded in 1949, the University of California, Los Angeles, School of Law is the young- est major law school in the nation and has established a tradition of innovation in its approach to teaching, research, and scholarship. Founded more than 60 years ago, the RAND Corporation is a nonprofit research orga- nization providing objective analysis and effective solutions that address the challenges that public and private sectors around the world are facing. For more information about the center and its research, contact the following directors: Joseph W. Doherty Director, Empirical Research Group University of California, Los Angeles, School of Law 385 Charles E. Young Drive East 1242 Law Building iii iv Third-Party Litigation Funding and Claim Transfer: Trends and Implications for the Civil Justice System Los Angeles, CA 90095-1476 310-206-2675 Fax: 310-206-6489 [email protected] James N. Dertouzos Director, RAND Institute for Civil Justice 1776 Main Street Santa Monica, CA 90406-2138 310-393-0411 x7476 Fax: 310-451-6979 [email protected] Contents Preface ........................................................................................................... iii Acknowledgments ............................................................................................. vii Chapter One Introduction ..................................................................................................... 1 Chapter twO Opening remarks and Framing the Central Issues ...................................................... 3 Litigation’s Purpose, Shortcomings, and the Desirability of More Litigation ............................ 3 Stakeholders and Products in Third-Party Funding Arrangements ........................................ 4 Chapter three Session One: The Current Landscape—Funding Claims in the United States ..................... 7 Fee Regimes ....................................................................................................... 7 Insurance and Litigation Funding ............................................................................. 8 Lawyer Investments in Claims ................................................................................. 9 Chapter Four Session two: Litigation Markets, Participants, and the Structure of Claim Investments ....... 11 Sources and Structures of Claim Investments ............................................................... 11 Litigation Markets and Litigation Accuracy ................................................................. 12 Chapter FIve Session Three: rules, regulations, and ethical Considerations of Third-Party Funding ....... 15 Professional Ethical Issues in Third-Party Litigation Financing........................................... 15 Third-Party Finance: Legal Risk and Its Implications ...................................................... 18 Financing and Firm Management ............................................................................ 19 Chapter SIx roundtable Discussion Summary .......................................................................... 21 What Is the Role of Regulation in an Emerging Industry? ................................................ 21 Chapter Seven Concluding remarks .......................................................................................... 25 v vi Third-Party Litigation Funding and Claim Transfer: Trends and Implications for the Civil Justice System AppendixeS A. Conference Materials ................................................................................... 27 B. Presenter Materials ...................................................................................... 43 Acknowledgments The RAND Institute for Civil Justice and the UCLA School of Law would like to thank the panelists, speakers, and all those who engaged in the conference discussions. We would particularly like to thank Lynn LoPucki, Selvyn Seidel, Herbert Kritzer, James Tyrrell, Tim Scrantom, Jonathan