In the landscape of legal battles, litigation funding has emerged as a critical tool for law firms pursuing sexual abuse suits against formidable institutions such as the Boy Scouts of America, the Catholic Church, and federal prisons. This development unfolds as mass tort cases experience a slowdown, compelling legal entities to seek innovative funding solutions to sustain their cases amidst rising competition for such litigation. With states expanding the statutes of limitations for filing older sexual abuse claims, there has been a significant increase in lawsuits filed against organizations accused of negligence in preventing exploitative actions.
Law firms are increasingly turning to specialized financial institutions, hedge funds, and litigation funders to underwrite these prolonged legal engagements. According to Jessica Pride, a San Diego attorney representing victims of sexual abuse, the financial requirements for litigation, including depositions and other legal processes, necessitate external funding to effectively manage and pursue these cases (Bloomberg Law).
Mass tort litigation, characterized by the potential for large settlements, has attracted funders amid a dwindling pipeline of such cases. Institutional sex abuse suits, due to their propensity for substantial settlement amounts, align well with funders’ investment strategies. Recent examples include substantial settlements by the Catholic Archdiocese of Los Angeles and a New York diocese, amounting to $880 million and $320 million respectively, as well as the Boy Scouts of America’s $2.46 billion agreement to settle widespread abuse allegations (Bloomberg Law report).
Firms are employing financing tactics such as high-interest loans, structured based on the perceived value of their cases, and back-end sharing arrangements with funders. Jessica Pride notes that the influx of attorneys into the area, many branding themselves as “MeToo lawyers,” reflects the transformation of the legal field in response to lucrative opportunities. Firms representing numerous abuse victims or playing key roles in settlement negotiations are among those benefiting from external capital.
California’s Andrews & Thornton, for example, showcased its engagement in the Boy Scouts litigation with funding deals involving Corbin Capital and Catalur Capital over recent years. Such firms use the capital to finance the extensive groundwork needed to build compelling abuse cases, including thorough documentation and victim testimonies, which distinguish these cases from other forms of tort litigation that rely more heavily on processing medical records.
Esquire Bank is a notable player in this sector, providing a financial lifeline through lines of credit tailored to plaintiffs’ firms. Although not deemed direct litigation funding, these arrangements facilitate crucial operational capabilities enabling firms to undertake these extensive litigations. The bank, previously aligned with prolonged mass tort cases, is pivoting towards investing in single-event cases. Legal practitioners like Elise Sanguinetti of Arias Sanguinetti affirm the necessity of such funding to manage their diversified caseloads effectively.
As mass tort cases continue to experience delays, the legal community is witnessing a shift in strategy, leading firms to explore diversified practice areas to mitigate financial pressures associated with ongoing legal battles. The evolving dynamics underscore the complexity and endurance required in the pursuit of justice for victims in these challenging cases.