Third-party litigation financing—often called “litigation funding”—has become a growing, often hidden force in today’s legal system. At its core, this practice allows outside investors, sometimes even foreign entities, to finance a lawsuit in exchange for a share of the potential settlement.
While it may sound harmless on the surface, litigation funding can introduce financial complications that impact consumers, businesses, and even insurance costs.
Because these agreements are usually kept confidential, it’s difficult to know who is influencing a lawsuit or driving decisions behind the scenes. In some cases, investors push for prolonged litigation in hopes of maximizing their financial return. Prolonged litigation can also lead to more lawsuits, inflated claim expenses, and higher overall legal costs, all of which have expenses that can eventually trickle down to individuals and businesses through increased insurance premiums.
For policyholders, understanding this trend is essential. Transparency matters.
When outside parties profit from drawn-out litigation, the system becomes less about fairness and more about financial gain.
As the insurance landscape continues to evolve, staying informed can help you better understand the forces shaping your insurance costs and the claims process. If you have questions about how these litigation and courtroom trends might affect your coverage or your business’s risk exposure, our team at North Cascade Insurance can help you navigate the details and stay protected!
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