Litigation finance can preserve or increase estate resources for creditors and enable additional recoveries.  Financing can be useful for debtors (or potential debtors), but can also be useful for creditors in intercreditor disputes or other matters and especially useful for a litigation or liquidation trust seeking to prosecute ongoing claims.  Fortunately, courts are recognizing that funding can play an appropriate role in bankruptcy proceedings, with two recent district court opinions leaving intact funding arrangements approved by the bankruptcy court.

In our last post, we examined how state law has addressed litigation finance, reviewing key cases in four states. We discussed the ongoing national trend towards removing perceived obstacles and clarifying that properly structured funding arrangements do not violate state law. Naturally, counsel exploring litigation finance options should be mindful of case law in their…

At Lake Whillans, we frequently field questions about the legal issues surrounding litigation finance.  One question that frequently comes up is whether legal doctrines such as champerty and maintenance impede litigation finance arrangements.  For the most part, the doctrines of champerty and maintenance do not impede litigation finance arrangements.  But the answer will depend significantly…

Counsel who have not been through the process of raising litigation funding often have questions about the risks of disclosing confidential information about their client’s case. The process of obtaining litigation funding necessarily involves sharing information about the facts, legal theories, damages and defenses of a claim, often coupled with discussions about the claimholder or counsel’s views on the strengths and weaknesses of each. Cases are more likely to get funded when a robust dialogue is established on these topics. Nonetheless, counsel should be aware of where the boundaries lie, and how to protect their clients from inadvertent waivers and fulfill their professional responsibility obligations.