Last week I was at a conference at DePaul University on Tort Law and Social Policy: A Brave New World: The Changing Face of Litigation and the Law Firm Finance.

The conference was centered on Alternative Litigation Funding [ALF] – also known as Third Party Litigation Funding or Financing, Third Party Funding or Financing.

ALF is when parties, unrelated to a lawsuit, provide funds to a claim holder to help fund the party’s pursuit of a potential or pending lawsuit and there is no recourse if the claim holder loses. Arguably, ALF has been around (in some form or another) for years in the United States – in the form of non-recourse loans, transfer of claims in bankruptcy proceedings, transfer of patent law claims, and contingency fees.

In the past few years, ALF has received more and more popular press and begun to attract the attention of more and more law professors like Anthony Sebok, Vicky Waye, Susan Lord Martin, and Maya Steinitz to name a few. When I first began writing about and consulting on the industry, many law professors did not know it was allowed in more than 50% of U.S. States – let alone that it existed. (This was true as recent as in 2011 when I presented an article that used ALF as an example of the importance of non-lawyer influence on lawyers). The recent attention ALF has received has heightened awareness of the existence of ALF in the U.S. but also the importance of the debate about whether and how it should be allowed and regulated.

At the DePaul conference, experts in the industry, along with experts in tort law reform, approached the debate in different ways.

Instead of evaluating ALF from a traditional, formalist view (cranking through the ethics rules to see if there is a violation), Nora Freeman Engstrom took a functionalist perspective to see how ALF will affect the tort marketplace.

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