Bloomberg Law recently released an insightful video feature, Billion Dollar Lawsuits: When Litigation Finance Met Mass Torts, which explores the evolving landscape of litigation finance and its impact on mass torts.

Mass torts have long been a high-stakes legal battleground, but the involvement of litigation finance firms has introduced new dynamics. Plaintiff firms often operate on contingency, receiving 20-40% of settlements or verdicts. Litigation funders, in return, receive a portion of the financial recovery, often structured as a multiple of their investment or a percentage of the final award. According to Westfleet Advisors’ 2023 Litigation Finance Market Report, the U.S. commercial litigation finance industry had an estimated $15.2 billion in assets under management.

Although mass tort litigation is commonplace today, it only began gaining recognition in the U.S. legal system in the late 20th century. Some of the earliest high-profile mass tort cases included asbestos litigation in the 1970s, lawsuits over Agent Orange exposure following the Vietnam War, and tobacco litigation in the 1990s. These cases established the framework for large-scale lawsuits involving multiple plaintiffs, ultimately leading to the development of Multi-District Litigation (MDLs) as a key procedural tool for managing such claims.

Another key consideration in litigation trend developments has been the increase in digital advertising to reach potential plaintiffs, which we have blogged about in the past. Using highly targeted digital campaigns — and, increasingly, AI-driven algorithms — plaintiff firms can reach greater numbers of people nationwide. Connecting with plaintiffs so easily and effectively was impossible in past decades. The influx of litigation finance has further fueled the rapid scaling of these efforts.

While proponents claim that litigation finance can provide access to justice for individuals who might otherwise be unable to afford legal representation, others argue that it leads to the filing of speculative claims while increasing costs and creating challenges for corporate defendants. Some lawmakers have proposed legislation aimed at increasing transparency in litigation finance agreements, requiring disclosure of third-party funding arrangements. For example, in October 2024, the Litigation Transparency Act of 2024 was introduced into the U.S. House of Representatives. It seeks to mandate disclosure of outside financial backing in civil lawsuits.

With mass tort litigation increasingly shaped by financial forces beyond the courtroom, KCIC will continue to monitor these trends and their implications for corporate defendants and the broader legal system.