Distinguished Fellow, National Judicial College
MONTH-IN-BRIEF (May 2025)
Professional Responsibility
Georgia Tort Reform Legislation Regulates Third-Party Litigation Finance
Alternative litigation financing (“ALF”), also commonly known as third-party litigation financing (“TPLF”), refers to a huge business that, in the United States at least, fills a market niche created by legal ethics restrictions on lawyers financing their clients’ litigation. (That prohibition is currently found in Model Rule 1.8(e), which forbids, subject to certain exceptions, a lawyer from “provid[ing] financial assistance to a client in connection with pending or contemplated litigation.”) ALF/TPLF is also a significant phenomenon in other common law jurisdictions, such as the United Kingdom and Australia.
TPLF constitutes a market solution to lawyers pricing themselves out of the market. Many meritorious claims would otherwise go unvindicated due to the inability of a large percentage of individuals to afford the increasingly exorbitant costs of litigation, particularly against well-heeled defendants.