[snowwrestler]

I think the secondary motive to be concerned about is not length of time in court, but the filing of marginal lawsuits because they can attract financing.

Lawsuit financing is a speculative investment. We've seen repeatedly that the more money there is to invest speculatively, the more people and companies start pushing the envelope to attract investment.

In the last 20 years we've seen big bubbles in Internet services and consumer mortgages. What would be the effect of a bubble in lawsuits? Aside from the financial harm, it might crowd out or delay more worthy court cases.

[petegrif]

Outside investors don't invest in 'marginal lawsuits.' One of the absolutely critical considerations for lawyers undertaking contingency cases is that they believe the case isn't marginal. I fail to see why an outsider would embrace more risk than such lawyers.

[snowwrestler]

This is analogous to saying "one of the absolutely critical considerations for banks undertaking mortgage lending is that they believe each loan is likely to be paid back. I fail to see why an outsider would embrace more risk than such banks."

But that is precisely what happened leading up to the 2008 financial crisis. And it happened because of outside financing. When banks were risking their own money, they maintained careful underwriting standards. When banks were risking someone else's money--and reaping fees instead--they relaxed their underwriting standards to increase volume.

A law firm undertaking a contingency case better be damn sure they are likely to win, because they are risking their own capital. A law firm with outside financing will get paid whether or not they lose.