State of New York - Part II Country Report - Handbook on Third-Party Funding in International Arbitration

Large scale litigation funding in New York is a well-established and accepted practice, though relatively young by comparison to certain European jurisdictions. New York’s status as a leading center of commercial litigation makes it likely that the use of TPF will only grow over time. Although a recent court decision may limit the use of TPF in certain smaller value cases, its use in the vast majority of commercial litigation cases, provided the underlying funding agreement is properly structured, generally enjoys the blessing of the New York courts.

1.1.2. Please shortly describe the TPF market in your Jurisdiction. Is it dominated by local or international Funders, which type of Funders are active, which cases get typically funded? Is there any source on Funders (like the overview published by the German Bar)?

New York State does not publish a comprehensive overview of litigation funders similar to that of the German Bar. Nevertheless, a party seeking litigation funding will find a host of national and international litigation funders operating in this jurisdiction, including Burford Capital, Bentham IMF, Lake Whillans, Parabellum Capital, and others.

1.1.3. Are there any statutes or case law dealing with TPF or regulating Funders? If yes, please address these.

New York State currently has no statutory provisions directly addressing TPF, nor is there any federal law governing TPF. In the absence of state or federal legislation, TPF in New York State is largely regulated by common law, New York’s champerty statute, and the rules governing privilege and attorney conduct, each of which are discussed in greater detail below.

Parties using TPF should be mindful of the fact that although TPF is a well-established practice in New York, the jurisprudence surrounding its implementation is swiftly evolving.