Originally from Handbook on Third-Party Funding in International Arbitration, Second Edition

PREVIEW PAGE

PART I.  THE THIRD-PARTY FUNDING LANDSCAPE

1.  The TPF market in New York

1.1.  Please shortly describe the TPF market in your jurisdiction.

The market for TPF in New York is well-established and, following broader national trends, has seen significant growth in recent years.    In the United States (“U.S.”), New York is viewed as one of most appealing states in which to invest in litigation funding. 

New York courts have viewed TPF arrangements favorably.  For example, some have permitted TPF despite Rule 5.4 of the New York Rules of Professional Conduct (“NYRPC”), which prohibits fee sharing with nonlawyers, noting that the rule was not intended to preclude portfolio funding or law firm financing arrangements.    As one New York court reasoned, “[p]roviding law firms access to investment capital where the investors are effectively betting on the success of the firm promotes the sound public policy of making justice accessible to all, regardless of wealth.”    

1.2.  Is it dominated by local or international funders? Which funders are active? and Which cases typically get funded?

The market for TPF in New York comprises a mix of funders, including those based in the United States. who primarily fund state or national litigation, those based in New York who fund both national and international cases, and those based outside of New York who fund international arbitrations with a nexus to New York.  Funders in New York finance both arbitration and litigation, which includes consumer litigation, such as personal injury and individual consumer cases, and commercial litigation, including class actions.  

1.3.  What types of funding exist (e.g., ISDS, commercial arbitration, portfolio funding, respondent-side funding, etc.)?

Funders operating in the New York market offer a variety of funding arrangements, such as:

•   Arbitrations, including investor-state and commercial arbitrations;

•   Respondent-side funding;

•   Purchasing awards subject to appeal or law firm receivables;

•   Single-case-only funding;

•   Specific case-type funding, such as the funding of Intellectual Property matters; 

•   Portfolio funding or law firm financing arrangements, to fund multiple matters through a single funding vehicle; or

•   Class-action or, outside the U.S., multiparty funding.