America’s civil justice system has long been the envy of the world. For 250 years, it has been the keystone of our economic and political liberties, providing a forum for individuals and businesses to redress wrongs and resolve disputes.
Today, this public good is at risk. Hedge funds, foreign wealth funds and other investors are transforming American courtrooms into a new capital market.
Rather than stocks or bonds, they are investing billions of dollars in litigation — creating, buying and controlling high-dollar lawsuits for profit, often hidden from judges, litigants and the public. The scale of these investments — called third-party litigation financing — is staggering and growing fast.
According to the U.S. Government Accountability Office, third-party litigation financing assets doubled from 2017 to 2021. Funders now manage more than $16 billion in litigation investments in the United States and are projected to exceed $30 billion by 2028. Those numbers reflect only self-reported data from major players, so the true figure is undoubtedly much higher.
All of this is relatively new. For centuries, legal doctrines barred outsiders from financing lawsuits because it was understood that outside money could corrupt the justice system. Today, however, courts are either unaware of the funding or ignore these principles.
