TPLF Tuesday, Week 1: Control Over Litigation Decisions

“If you don’t take money, they can’t tell you what to do.” ― Bill Cunningham

Third-party litigation funding (TPLF) agreements typically grant non-party funders some level of control over key litigation decisions. This control can include veto power over settlement and litigation strategy. Courts have recognized this reality—in Boling v. Prospect Funding Holdings, LLC, 771 F. App’x 562, 579–80 (6th Cir. 2019), the Sixth Circuit observed that the funding agreement “effectively g[a]ve [a TPLF entity] substantial control over the litigation,” including terms that “may interfere with or discourage settlement” and otherwise “raise[d] quite reasonable concerns about whether a plaintiff can truly operate independently in litigation.” Control features are unlikely to be express and are often a function of how the continuation of funding works. TPLF contracts are known to include boilerplate purporting to disavow control. Courts and parties need to know who is “in the courtroom” making decisions, and the only way to understand if a TPLF contract gives control over litigation to a non-party is disclosure of TPLF contracts.