The Center for Public Integrity

The latest story in the Center's "Betting on Justice" series about the fast-growing litigation finance industry looks at lobbying efforts in U.S. statehouses.

The business of lending to plaintiffs has blossomed over the past decade, part of a growing trend in which banks and hedge funds seeking untapped markets are pumping money into other people's lawsuits.

In 2002, the New York state bar association said attorneys financing a lawsuit with borrowed money may pass the interest costs onto their clients.

The American Bar Association says it is studying whether third-party investment in lawsuits, in the form of loans to lawyers or financing arrangements with their clients, may run afoul of ethical rules governing attorney conduct.

Large banks, hedge funds and private investors hungry for new and lucrative opportunities are bankrolling other people’s lawsuits, pumping hundreds of millions of dollars into medical malpractice claims, divorce battles and class actions against corporations — all in the hope of sharing in the potential winnings.