The involvement of litigation funding in the ongoing antitrust lawsuit against US universities illustrate the range and reach of the industry, and the need for regulation. Image Source: Milwaukee Indpendent

While KnowSulu has previously reported how firms like Therium use states such as New Jersey —where regulatory standards are looser—to bypass stricter vetting in politically charged international cases, the United States is facing its own reckoning over the ethics and transparency of this financial model.

The university antitrust case, now before U.S. District Judge Matthew Kennelly in Chicago, centers on whether lawyers from Gilbert Litigators & Counselors (GLC) are qualified to represent more than 200,000 current and former students. The universities, including Cornell, the University of Pennsylvania, the Massachusetts Institute of Technology, Georgetown, and Notre Dame, have challenged the adequacy of GLC’s representation.

While the details of the universities’ filed under seal, their argument follows rising global concerns that opaque third-party funding may compromise a lawyer’s independence, giving investors—who stand to profit from the outcome—undue sway over how a case is argued or when it settles.

Reports from industry observers—including recent findings by the U.S.-based Lawyers for Civil Justice (LCJ)—have warned that opaque funding agreements could grant financiers unethical levels of control over legal strategy and settlement decisions. In one prominent example from the United Kingdom, litigation finance firm Therium faced allegations of directly funding members of the steering committee in the prominent sub-postmasters case, raising questions about independence and oversight.

Litigation finance firm Therium faced allegations of directly funding members of the steering committee in the sub-postmasters case, raising questions about independence and oversight.

Under the standard funding model, investors pay legal costs on a “no win, no fee” basis, receiving a share of any settlement or judgment. But critics argue that this structure can lead to conflicts of interest, with funders potentially influencing when or whether a case settles. There are concerns that funders could discourage early settlements to seek higher returns or push premature resolutions to reduce costs, both of which could harm plaintiffs’ interests.

Funders could discourage early settlements to seek higher returns or push premature resolutions to reduce costs, both of which could harm plaintiffs’ interests.

The growing unease has spurred calls for reform in Washington. Senator Thom Tillis introduced the appropriately named “Tackling Predatory Litigation Funding Act” (S.1821), which sought to impose a 41% tax on profits earned by litigation funding investors. Though the bill did not pass, Tillis has pledged to reintroduce a revised version, arguing that it is unfair for lawsuit investors to receive more favorable tax treatment than plaintiffs who win compensation. He described the current system as “silly,” emphasizing the need to align the tax code with basic fairness.

Tillis has arguing that it is unfair for lawsuit investors to receive more favorable tax treatment than plaintiffs who win compensation.

This concern hits at the heart of the matter: given the significant pull litigation funders exert, are they equal or even controlling parties over the plaintiffs they claim to support in any litigation?

As the legal and political debates evolve, courts and regulators face the challenge of balancing financial access to justice with the need for transparency. Supporters of litigation funding say it allows individuals and smaller firms to take on powerful institutions they could not otherwise afford to challenge. Opponents counter that, without clear oversight, the system risks turning litigation into another investment vehicle for profit-seeking financiers.

The outcome of the American universities case could prove pivotal. Depending on how the court addresses questions of disclosure and adequacy of representation, the decision may shape future policies governing litigation funding transparency across the United States even as Europe continues to grapple with similar challenges.

REFERENCES

KnowSulu. (2025, October 27). Litigation funders face scrutiny over offshore structures and opaque dealings. KnowSulu. https://knowsulu.ph

Scarcella, M., Merken, S., & Thomas, D. (2025, October 9). Elite colleges target lawyers’ funding in antitrust class certification fight. Reuters. https://www.reuters.com

Siegel, E. R. (2025, October 28). Litigation finance tax fight heads for second round, Tillis says. Bloomberg Law. https://news.bloomberglaw.com

U.S. Congress. (2025). S. 1821 – Tackling Predatory Litigation Funding Act. Congress.gov. https://www.congress.gov