Litigation Investors Gain Ground In U.S.
From the Wall Street Journal
Investors who back high-stakes lawsuits haven't always found the warmest reception in the U.S., where historic bans on such arrangements have at times proved harder to dislodge than in the U.K. or Australia.
But the lure of big-time payoffs in the world's largest litigation market continues to draw so-called litigation funders, who invest in business disputes in exchange for a cut of the proceeds if their side prevails.
In places like Texas, South Carolina, Massachusetts and Florida, restrictions on third-party financing of litigation have either been relaxed or abolished.
The climate also looks friendlier in Illinois.
Last week, in a ruling on a dispute over pretrial discovery, a federal magistrate judge in Chicago held that a British company, Miller U.K. Ltd., didn't violate state law when it turned to third-party funders for money to pursue an existing lawsuit against heavy-equipment maker Caterpillar Inc. over alleged theft of trade secrets. The judge rejected Caterpillar's attempt to obtain documents containing details of Miller's litigation-finance arrangements in the lawsuit, which is continuing.
Caterpillar had argued that third-party funding documents weren't protected by attorney-client privilege, and that Miller's financing deal was illegal under an Illinois statute that criminalizes so-called "officious intermeddling" in lawsuits by outside parties. The judge disagreed with the latter claim, and said most of the information that Miller had refused to turn over wasn't relevant to the case.
"Caterpillar tried to use the fact that there was litigation investment as an attack on the party suing them for trade secrets. That failed," said Anthony Sebok, a professor at the Benjamin N. Cardozo School of Law at Yeshiva University in New York.
Read more in our daily News Update...
From the Wall Street Journal
Investors who back high-stakes lawsuits haven't always found the warmest reception in the U.S., where historic bans on such arrangements have at times proved harder to dislodge than in the U.K. or Australia.
But the lure of big-time payoffs in the world's largest litigation market continues to draw so-called litigation funders, who invest in business disputes in exchange for a cut of the proceeds if their side prevails.
In places like Texas, South Carolina, Massachusetts and Florida, restrictions on third-party financing of litigation have either been relaxed or abolished.
The climate also looks friendlier in Illinois.
Last week, in a ruling on a dispute over pretrial discovery, a federal magistrate judge in Chicago held that a British company, Miller U.K. Ltd., didn't violate state law when it turned to third-party funders for money to pursue an existing lawsuit against heavy-equipment maker Caterpillar Inc. over alleged theft of trade secrets. The judge rejected Caterpillar's attempt to obtain documents containing details of Miller's litigation-finance arrangements in the lawsuit, which is continuing.
Caterpillar had argued that third-party funding documents weren't protected by attorney-client privilege, and that Miller's financing deal was illegal under an Illinois statute that criminalizes so-called "officious intermeddling" in lawsuits by outside parties. The judge disagreed with the latter claim, and said most of the information that Miller had refused to turn over wasn't relevant to the case.
"Caterpillar tried to use the fact that there was litigation investment as an attack on the party suing them for trade secrets. That failed," said Anthony Sebok, a professor at the Benjamin N. Cardozo School of Law at Yeshiva University in New York.
Read more in our daily News Update...