George Mason University

Thursday, October 13, 2011
D. Scott Hazelgrove

Last week, the Searle Civil Justice Institute (SCJI) at the George Mason University Law & Economics Center hosted a public policy conference on third-party financing of litigation in New York, NY.  This was the first of two policy conferences for SCJI’s initiative entitled, Third-Party Financing of Litigation: Civil Justice Friend or Foe? By several measures, the conference was a tremendous success.

With a packed room, diverse viewpoints, and robust policy discussions, SCJI set the bar high for future discourse on this increasingly popular policy issue.  Maya Steinitz, Professor of Law at the University of Iowa College of Law, specifically praised the “high-caliber” nature of the discussions throughout the conference and noted that this initiative had created an “explosion” in the literature.

SCJI hosted over 50 individuals at the New York Athletic Club for two half-days of panel presentations.  Each panel was comprised of scholars commissioned to make unique contributions to the literature, as well as legal practitioners, industry members, and other interested academics to facilitate the development of sound, policy-driven discourse.

Tony Sebok, Professor of Law at the Benjamin N. Cardozo School of Law, graciously noted that the conference effectively illuminated “the nuances of various positions.”  As Geoff Lysaught, Deputy Executive Director of the Law & Economics Center, remarked, “by hosting a diverse set of perspectives in the marketplace of ideas, SCJI aims to provide ample opportunity for such various positions to be fully vetted in discourse that reflects both sound theory and hard facts.”

This initiative, in particular, was designed to fill gaps in a literature that, with a fairly broad brush, paints a rosy picture of third-party financing, while glossing over some important potential costs and economically harmful long-term consequences.  At the conference, even the most ardent supporters of third-party financing recognized some potential pitfalls of allowing the practice to flourish.  Others noted that causes for concern are especially great in litigious countries like the United States, whose legal system has fueled the phrase “U.S.-style litigation” to be used pejoratively around the world.

Perhaps most telling were the remarks of Richard Fields, CEO of the litigation funding firm Juridica Capital, Ltd.  Despite arguing for an unhampered third-party financing market, Mr. Fields importantly called for complete transactional transparency.  Moreover, he has repeatedly argued against using third-party financing for personal injury and class action litigation.

SCJI’s work on the issue of Third Party Financing of Litigation is ongoing.  On November 9 and 10, 2011, SCJI will host an academic and policy conference in Brussels, Belgium.  Commissioned scholars will continue to crystallize their positions, and their papers will continue to be evaluated on their way to publication in the Journal of Law, Economics & Policy in Spring 2012.  Please visit http://www.masonlec.org/events/third-party-financing-of-litigation-civil-justice-friend-or-foe/ to view the conference agenda and to learn more about this important policy issue.

Key Participants:

• David Abrams, Assistant Professor of Law, Business, and Public Policy, University of Pennsylvania Law School
• Joanna Shepherd Bailey, Associate Professor of Law, Emory University School of Law
• George Barker, Director, Centre for Law and Economics, The Australian National University
• Michelle Boardman, Assistant Professor of Law, George Mason University School of Law
• Alexander Bruns, Director of the Institute for German and Foreign Civil Procedural Law, Freiburg University
• Richard Fields, Chairman and Chief Executive Officer, Juridica Capital Management, Ltd.
• Kirby Griffis, Partner, Hollingsworth LLP
• Keith Hylton, Professor of Law, Boston University School of Law
• Jeremy Kidd, Visiting Professor of Law, George Mason University School of Law
• Geoff Lysaught, Deputy Executive Director, Law & Economics Center
• Marco de Morpurgo, Associate, Covington & Burling LLP
• Alan Morrison, Lerner Family Associate Dean for Public Interest and Public Service, George Washington University Law School
• Roger Parloff, Senior Editor, Fortune Magazine
• Tony Sebok, Professor of Law, Benjamin N. Cardozo School of Law
• Mary Terzino, Attorney and Consultant
• Ianika Tzankova, Professor of Comparative Mass Litigation, Tilburg Law School
• Cento Veljanovski, Managing Partner, Case Associates; IEA Fellow in Law and Economics; Adjunct Senior Research Fellow, Centre for Regulatory & Market Analysis, University of South Australia

D. Scott Hazelgrove (dhazelgr@gmu.edu) is a Policy and Research Associate at the Law & Economics Center.