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Editor’s note: The author is CEO of litigation funder Validity Finance. The opinions expressed here are his own and do not necessarily reflect those of CFO. The article is a response to the U.S. Chamber of Commerce’s calls for regulation of and transparency around the controversial litigation finance industry. Click here for a balanced discussion on the relative merits of potential ethical issues presented by litigation finance.
In an ideal world, America’s civil justice system would provide for resolution of legal claims in a fair, efficient manner in a neutral forum accessible to everyone. Unfortunately, we do not live in that world.
Litigating commercial disputes takes too long, costs too much, and excludes parties that lack the resources to litigate. That’s bad for American companies, and bad for the rule of law.
Consider that on average a civil case takes two years from the time of filing until it reaches trial. Even a straightforward commercial case can cost from tens of thousands to millions of dollars to litigate, and the price keeps rising. In recent years litigation costs have risen approximately 4% to 8% annually.
The length, complexity, and cost of litigation gives parties with deep pockets an almost insuperable procedural advantage that has little to do with the merits of the case.
A Fortune 500 company with established lines of business and billions of dollars in revenues can easily weather a multi-year, multimillion-dollar legal battle. But what would be a nuisance to a large multinational could pose an existential threat to a small or mid-size company.
The problem is so acute that according to a recent industry survey, 70% of companies have declined to pursue legitimate, meritorious claims simply because they lack the resources to fully litigate the case....