The media has suddenly become very concerned about outside financing for litigation. The reason is that such financing is for the first time supporting a well publicized lawsuit against the press. The Silicon Valley mogul Peter Thiel has contracted to provide financial support for a lawsuit against the gossip site Gawker on invasion of privacy grounds.
Litigation financing should be celebrated rather than deplored, because it equalizes access to justice. Some kinds of suits pursue novel or risky claims. Even lawyers on contingency fees may be unwilling to take them for those who cannot pay or they may take an exorbitant cut for their doing so. But litigation finance can draw on institutional or wealthy investors that can underwrite the risk. Institutional investors finance a portfolio of lawsuits and this diversification permits them to suffer losses in many lawsuits, while still coming out ahead overall.
Thiel, however, is not a diversified investor in lawsuits, but appears to be financing only defamation and invasion of privacy suits against Gawker and similar gossip sites.