GlobalEcon Expert Joanne Shepherd-Bailey Comments on Third-Party Lawsuit Investors

By Global Economics Group on October 4, 2011

 GlobalEcon’s Director Joanne Shepherd-Bailey comments on the practice of enlisting third-party investors to fund to litigation costs in exchange for a slice of the lawsuit’s winnings.

Third-party funders tend to bet on patent or antitrust cases for the biggest profit, but “the potential downsides for the defendants are huge,” Bailey said, citing the possibility of treble damages and preliminary injunctions as examples of “negative side effects that can ruin a company.”

Previously, common law didn’t allow third-party financing, Bailey said, but current law varies from state to state, and no U.S. court has weighed whether the practice is legal.

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