Faculty Bibliography

Recent years have seen an explosion of interest in commercial litigation funding. Whereas the judicial, legislative, and scholarly treatment of litigation finance has regarded litigation finance first and foremost as a form of champerty and sought to regulate it through rules of legal professional responsibility (hereinafter, the “legal ethics paradigm”), this Article suggests that the problems created by litigation finance are all facets of the classic problems created by “the separation of ownership and control” that have been a focus of business law since the advent of the corporate form. Therefore, an “incorporation paradigm,” offered here, is more appropriate. “Incorporating legal claims” means conceiving of the claim as an asset with an existence wholly separate from the plaintiff. This can be done by issuing securities tied to litigation proceed rights. Such securities can be issued with or without the use of various business entities. The incorporation paradigm also opens up the possibility of applying practices of corporate governance to litigation governance. Indeed, in certain previously overlooked real-world deals, creative lawyers used securities tied to litigation proceed rights as well as corporate governance mechanisms. This Article analyzes and then expands upon such instances of financial-legal innovation, suggesting how various business entities can be used to deal with the core challenges presented by the separation of ownership of and control over legal claims: specifically, the problems of (1) extreme agency problems; (2) extreme information asymmetries; (3) extreme uncertainty; and (4) commodification. In addition, this Article discusses how incorporation of legal claims can reduce various costs that litigation imposes in other transactions, such as mergers and acquisitions.

We live in a world in which the victims of cross-border mass torts de facto (not de jure) have no court to turn to in order to pursue legal action against American multinational corporations when they are responsible for disasters. The only way to provide a fair and legitimate process for both victims and corporations is to create an International Court of Civil Justice (ICCJ). This Essay seeks to start a conversation about this novel institutional solution. It lays out both a justice case, from the plaintiffs’ viewpoint, and an efficiency case, from a corporate defendant’s viewpoint, for why a world with an ICCJ would be a better place. The Essay also provides an initial blueprint for such an ICCJ. In so doing, it explains why an ICCJ is politically viable and may, specifically, appeal to rather than repel the least likely constituency: corporate America. The Essay concludes with a call for action and a research agenda.

Litigation financing is nonrecourse funding of litigation by a non-party for a profit. It is a burgeoning and controversial phenomenon that has penetrated the Unites States in recent years. Since "most of the important phenomena of modern litigation are best understood as results of changes in the financing and capitalization of the bar," it is not surprising that litigation financing has been dubbed by RAND as one of the "biggest and most influential trends in civil justice" and by the Chamber of Commerce "a clear and present danger to the impartial and efficient administration of civil justice in the United States." In the past couple of years it has captivated equally the law reviews, the daily mainstream media, regulators, legislatures and the courts. However, there is a complete absence of information about or discussion of litigation finance contracting, even though all the benefits and risks embodied in litigation funding stem from the relationships those contracts shape and formalize. In A Model Litigation Finance Contract we (i) set out the efficiency and justice case for a model contract; (ii) build on previous work to make the case for using venture capitalism as analog and starting point for modeling contracts; (iii) describe the ethical and economic challenges faced by the parties entering into litigation finance contracts and narratively explain the contractual solutions they have devised to eliminate or minimize such pitfalls; (iv) provide a model contract and; (iv) conclude by mapping out a research agenda for the new field of litigation finance contracting.