The debate around litigation finance has always centered on its impact on the civil justice system — does it promote access to justice, or does it invite frivolous litigation? A forthcoming article in the Southern California Law Review argues that framing misses the bigger picture entirely.
In “Litigation Finance in the Market Square,” authors Suneal Bedi (Indiana University Kelley School of Business) and William C. Marra (University of Pennsylvania Carey Law School) reframe litigation funding as a corporate finance instrument: legal claims are assets, funders are asset-based investors, and regulations that restrict funding are interventions in the capital markets — not just the courts.
Their central finding: litigation finance is used disproportionately by small and medium-sized enterprises that lack access to traditional equity and debt markets. Regulations targeting third-party funding — like the District of New Jersey’s disclosure rule and Louisiana’s SB355 — selectively burden this group while exempting the financing methods more commonly used by large corporations. The result, the authors argue, is a competitive advantage for incumbents dressed up as a judicial reform.
For legal professionals and legal technology companies, the implications are concrete: AI-assisted case evaluation, disclosure compliance tracking, and SME-focused legal finance tools are all areas where the gap between current practice and genuine need is measurable.
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