Seyfarth Synopsis: American and
international courts have been debating the tentative legality of
disclosing third-party litigation funding. In this vlog video,
Seyfarth Shaw Associate Alex Karasik sits down with class action
litigator Jerry Maatman to discuss what third-party litigation is,
what it means for businesses, and the tactics that businesses can
use to get in front of this phenomenon.
Background
A recent trend has emerged in the class action landscape whereby
a third-party funder pays the owner of a civil claim an up-front
monetary payment in return for the claim owner's promise to
convey a portion of the potential recovery. Class action
plaintiffs' attorneys and third-party funders are incentivized
under this approach through tax advantages, whereby the attorneys
can defer tax liability on the monetary advancement until the claim
pays off while the funders can deduct their expenses and pay tax on
any profit at the lower capital-gains rate.
