111 Iowa L. Rev. 1709 (2026)
 

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Abstract

Third-party litigation funding, often referred to as TPLF or litigation finance, is an arrangement where a third-party lender provides financial backing to a litigant pursuing a legal claim in exchange for a payout if the case is successful. The litigation finance industry has become increasingly popular as more claimants seek to avoid the high costs of litigation, yet, despite this growth, the United States has failed to implement any formal federal regulations on TPLF. This gap leaves an enormous amount of pressure on states and courts to try and police litigation funding arrangements. Three antitrust cases involving protein distributors and producers highlight an emerging issue in the litigation finance industry where funders are trying to enter a litigation by substituting themselves for the party they are financing. Even if the original party wants to settle, substitution allows funders to continue to pursue the claims in order to seek the highest possible return on their investment. Calling on the medieval doctrines of maintenance and champerty, as well as federal and state public policy considerations, courts are split as to whether or not litigation funders should be permitted to enter into a litigation midway through a suit. This Note argues that litigation funding agreements that contractually permit a funder to have control over a litigation are champertous and thus violate public policy. Further, substitution of litigation funders contravenes the foundational and well-grounded principle of “justice” within the Federal Rules of Civil Procedure and disregards the promotion of obtaining settlements within the American legal system.

Published:
Friday, May 15, 2026