Week 8: Facilitating Resolution

Parties need to know who controls litigation decisions in order to engage in productive settlement discussions. Courts know this, which is why judges routinely require decision-makers to be present during settlement conferences. Third-party litigation funding (TPLF) contracts interject non-parties into the equation by allotting some or all of the funded party’s control over litigation and settlement decisions to a funder. If TPLF contracts remain undisclosed, “the settlement process often unravels when the nominal plaintiff or its counsel needs to obtain approval from undisclosed non-party funders or uses the non-party as an excuse to retract a commitment to settle,” as 124 companies explained in a letter to the Advisory Committee on Civil Rules.

Settlement discussions proceed more productively and with greater likelihood of success when courts and parties understand who’s making the decisions, and the only way to understand who controls settlement decisions is through disclosure of TPLF contracts.