Liability as Investment Opportunity

The New York Times recently noted the trend toward third-party litigation investment, where investors provide money to litigants in exchange for a share of potential judgment award. Blogger Jordan Furlong decried the practice, saying it “bump[s] up against the basic principles of the justice system” and is “a grave embarrassment to the legal profession.” While his point that third-party litigation funding serves as evidence of the prohibitively high costs of litigation is valid, it is difficult to look past anything that might help consumers gain access to the legal system.

​Furlong correctly observes that the legal process is “labyrinthine, process-drenched, and time-devouring,” resulting in costs that place legal access beyond the reach of “what 80% of the population can afford. Few would argue. The legal system is exceptionally complex, often unnecessarily so, but we can’t afford to wait for the legal system to untangle its own bramble bush.
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The cost of access to the justice system is high in large part because only lawyers are permitted to offer legal services. Lawyers don’t want to charge less to perform routine tasks, but neither are they willing to allow other professionals to perform them. Allowing non-lawyer practitioners to draft wills or review simple contracts, allowing lawyers to offer services online through a virtual practice, and expanding the role of small claims court all would give consumers access to a wide array of low-cost alternatives to traditional and expensive legal services.