Risk “Issue” Week (Part 3) — Litigation Financing and Discovery Disclosure Rules & Trends

From Stephanie Spangler, an associate at Norris McLaughlin PA, and Dai Wai Chin Feman a director and corporate counsel at Parabellum Capital LLC, comes an overview on the latest news and view on litigation finance: “What Courts Are Saying About Litigation Finance Disclosure” —

  • “That debate continues, with defendants persisting in propounding document requests, interrogatories and deposition questions regarding the identity, terms and other aspects of financing arrangements. As defendants continue to seek discovery, courts continue to weigh in.”
  • “In Pipkin v. Acumen,[3] the U.S. District Court for the District of Utah prohibited any discovery regarding litigation funding on the basis of relevance… In granting the plaintiff’s motion for a protective order, the Pipkin court held that ‘information related to funding of the litigation is irrelevant to the claims and defenses of the case and, therefore, Plaintiffs’ funding of the lawsuit is not discoverable.’ With respect to credibility, the court found the defendant’s argument to be ‘entirely speculative and insufficient to demonstrate the relevance of the sought-after fee agreements.'”
  • “In Fulton v. Foley, the U.S. District Court for the Northern District of Illinois quashed a subpoena to a litigation funder on the grounds of relevance and attorney work product. However, the Fulton court ordered the plaintiff to produce ‘all non-mental impressions, fact-based information and documents including any statements provided by Plaintiff directly, if any, that was provided to [the litigation funder].'”
  • “In looking at the specific discovery issues at hand, the court held that the funding agreement documents are irrelevant to the mitigation of damages because in the event of a successful outcome, the plaintiff will be obligated to repay the funder and, therefore, the funds are not income.”
  • “However, the Fulton court took the rare step of ordering production of nonprivileged fact-based communications between the plaintiff and litigation funder. This may be of limited ultimate utility for the defendant, as the common interest privilege will likely apply to most, or all, of the materials shared.”
  • “In Continental Circuits LLC v. Intel Corp., the U.S. District Court for the District of Arizona denied the defendants’ motion to compel the production of litigation funding agreements on the basis of work product.”
  • “However, the court ordered the plaintiffs to identify “all persons or entities (other than counsel) with a fiscal interest in the outcome of the litigation,” and held that ‘the fact of the funding agreements’ existence’ does not, in and of itself, constitute work product.”
  • “In support of their motion to compel, the defendants argued the discovery is relevant to ‘to refute any David vs. Goliath narrative at trial, to evaluate the value of the patents at issue and any damages claimed by Plaintiff, to address bias and prejudice of witnesses who may appear at trial, and to identify any jurors who may have a relationship with a litigation funder.’ The plaintiff asserted that the requests were not relevant and disclosure was barred by the work product doctrine.”
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