Suppose Americans could fund litigation without contingency? That's already possible in England.
As Kevin LaCroix reports in THE D & O Diary, thanks to recent English case law, litigation can be treated as an investment asset. A third-party such as hedge or private equity funds can purchase the claim, sell securities in it, and then operate the case for a profit.
In the U.S., explains Sandeep Salva, that's not possible. In his April 25, 2008 article "Securities Class Actions in London," in CLASS ACTION LITIGATION, he notes in America, "claim assignment is prohibited to a purchaser who has not actually suffered an injury" - see "Independent Investor Protective League v. Saunders," (E.D. Pa. 1974).
The advantage is that this lessens the individual risk in England's "Loser Pays" system. Since barristers's fees tend to be higher than U.S. attorneys's, says Joseph Hetrick of Dechert Law Firm, Loser Pays can limit access to the court. The disadvantage, as Salva notes, is that industries, such as the securities market, might perceive this greater access as a severe threat and not do business in England.
In the U.S., given the controversy surrounding contingency in lawsuits filed by government entities using private law firms and by so-called "ambulance chasers," it might be useful to at least explore this approach now legal in England. Pending in the California Supreme Court is contingency in the Santa Clara lead paint public nuisance case. The trial court nixed contingency, the appeals court okayed it. The arguments against range from alleged violations of due process and separation of powers to the difficulty of government's control over the litigation. The arguments for, as in England, focus on access to the court.
Of course, Americans might not welcome the profit incentive incorporated so directly into the legal system.