[rayiner]

The arguments against litigation funding are not compelling. In particular, funded lawsuits tend to be much higher quality than contingency ones. Funders are investors. They do due diligence on the merits of the cases because they want to get their money back. And their cost structure doesn't really support funding cases where the hoped-for resolution is a hundred grand in "go away" money. If someone is willing to sink a million dollars or more into a case, that's an indication that it's not frivolous.

[petegrif]

I think it is extremely unlikely that 'funded lawsuits tend to be much higher quality than contingency ones.' I can imagine them being of slightly higher quality but not much for the simple reason that contingency cases involve attorney's making an investment decision and those attorneys frequently sink millions of dollars into cases and 'want to get their money back.' The only reason one could argue that funded cases may even be of slightly higher quality is that it is harder for the investor to assess the merits of the case than for the lawyers bringing the suit. But even this argument is pretty weak because any such potential investors can hire experts to assess the case.

[rayiner]

Are you disagreeing with me or agreeing with me? Lawsuits financed by litigation funders are much higher quality than ones where attorneys are working on contingency. Attorneys working contingency have committed time, the opportunity cost of which may or may not be that high. If they can get away with not investing much time, they might be happy with a small nuisance settlement.

A litigation funder, on the other hand, will commit hundreds of thousands or millions of dollars up front. They can hire experts to assess each case, and won't finance a case if they don't think they have a high probability of a significant recovery. And their cost model is such that it makes no sense for them to finance a case hoping for a nuisance settlement.