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"Putting Money on Lawsuits, Investors Share in the Payouts"

The New York Times covers the issue of litigation financing, which can range from basic high-interest loans to law firms; to contingent arrangements linked to specific lawsuits; to the potentially troubling practice of tricking consumers to assign litigation rights and enmesh them in lawsuits against defendants who could have more quickly and cheaply assisted the consumers if they had gone through normal warranty procedures. The practice drew attention recently when Judge Hellerstein prohibited Napoli Bern from seeking reimbursement from their clients for its interest expenses in financing the Ground Zero litigation on top of the exorbitant contingent fees.

Update: good commentary from Walter Olson and Daniel Fisher @ Forbes. The problem that Fisher identifies of lawyers strong-arming clients into settlements that pay the lawyers quickly after they've promised the moon, however, is one that is independent of litigation financing, except to the extent that the attorney would not have brought the suit without the financing or the extent that the financier is dictating the attorney's strategy.

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Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.