A Dive Into Third-Party Litigation Financing And Third-Party Medical Funding

¹ A few years ago, commentators estimated there was $5 billion in litigation financing in the United States.² Since then, the litigation funding industry has continued to grow. For good reason, Third-Party Litigation Financing ("TPLF") and its offshoot, Third-Party Medical Funding ("TPMF"), are hot topics in litigation. They are issues for defendants in a variety of types of litigation, including product liability disputes.

These two financial mechanisms are largely unrelated. In traditional TPLF arrangements, an investor advances money to a party—usually a plaintiff—to pay lawsuit expenses. In exchange, plaintiff agrees to give the investor a portion of his proceeds from the litigation. Traditionally, these are nonrecourse investments, in which the funder is guaranteed a portion of any awarded damages, including fees, judgments, or settlements.