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Burford Capital comments on The Litigation Funding Transparency Act of 2018

October 11, 2019

There is a desire in some corners of the American legal system for there to be disclosure of litigation finance arrangements in proceedings involving multiple claimants, such as class actions or multidistrict litigations. Over the past week, we have seen that there is a right way and a wrong way to handle disclosure, the purpose of which is to avoid conflicts of interest.

Burford Capital has recently commented on what we consider to be the right way to handle disclosure in such proceedings. Judge Dan Polster, who is overseeing the opioids MDL, has ordered lawyers to disclose litigation financing ex parte and in camera to him. Judge Polster makes clear that the purpose of the disclosure is simply to affirm that there is no conflict and that the funder exercises no control over the matter. Judge Polster also makes clear that no discovery will be permitted into the litigation finance agreements—recognizing, as do the overwhelming majority of courts that have considered the issue, that these constitute protected attorney work product.

Judge Polster’s order smartly addresses the core question of conflicts of interest without creating a potential for discovery detours that cause unnecessary delays and add unfair cost burdens. He also avoids handing defendants an unfair advantage by getting a free look at plaintiffs’ financial affairs.

By contrast, The Litigation Funding Transparency Act of 2018 introduced today by Senators Grassley, Tillis and Cornyn is an example of the wrong way to handle disclosure—mandating broad disclosure to the defendant. No one has come up with any reasonable justification for a general rule requiring plaintiffs to disclose their sensitive financial arrangements to defendants, yet the proposed legislation sets the stage for this to occur. The Litigation Funding Transparency Act of 2018 is exemplary of calls for disclosure that talk about creating transparency but that are ultimately misused to create expensive and time-wasting frolics and detours in litigation and as a tactical device by defendants.

It is widely recognized that litigation finance has become a part of the legal mainstream. As the world’s largest provider of litigation finance to commercial litigants—both plaintiffs and defendants—Burford looks forward to contributing to the dialogue around disclosure to ensure that it is addressed in the right way.