Wall Street hedge funds are cashing in on New York’s legal feeding frenzy by financing “mass tort litigation” over prescription drugs and medical devices in exchange for a piece of the action when the cases settle, the “Judicial Hellholes” report reveals.
The result is an “unfair playing field for defendants,” the report says.
Tom Stebbins of the Lawsuit Reform Alliance of New York called the funding “the latest money-making innovation for the lawsuit industry.
“Our civil-justice system has been converted into a profit center,” Stebbins said.
“Financiers draw out cases to maximize return, not ensure fairness in the system.”
The situation led the New York City Bar Association to issue a formal ethics opinion in July, barring lawyers from cutting funding deals with non-lawyers.
That edict, intended “to protect the lawyer’s independence of judgment,” followed a New York Times report on a boom in litigation financing by hedge funds.
The Times article, published in June, cited analyst estimates that litigation funding was a burgeoning, $10 billion industry.