Third-Party Litigation Financing

Third-party litigation financing (TPLF), or lawsuit funding, is the practice of investors buying an interest in the outcome of a lawsuit, and has become a multi-billion-dollar industry.

Third party litigation financing raises ethical concerns by allowing funders to interfere with litigation decisions, which compromises attorney independence and raises costs for litigants.

Economic impacts include:

• Direct annual losses of approximately $35.8 billion (as of 2024)
• $54.2 billion in gross product and 454,450 jobs when multiplier effects are included
• Consumer costs of about $193 per person and $607 per household
• Source: The Impact of Third-Party Litigation Funding on U.S. Business Activity and Consumers Report 2026

Hidden Money Pours Into Litigation: Third Party Litigation Funding

“Civil litigation provides a means of resolving disputes between parties, those named in a lawsuit as plaintiffs and defendants. Common law doctrines traditionally prohibited ‘strangers’ to a lawsuit from meddling in litigation or having a financial interest in the outcome due to the potential for litigation abuse. As those principles have fallen by the wayside, outside investors have poured money into civil litigation.”

Read more in the Judicial Hellholes® “Closer Looks” section on third-party litigation financing.

If third party litigation financing continues, regulations should be put in place that increase transparency for litigants and maintains the integrity of the judicial system.