As Litigation Finance Industry Matures, Links with Insurance Tighten

Scott Greenspan, Co-Chair of the Sills Cummis & Gross Insurance Practice Group and Chair of the Firm’s New York Insurance Practice Group, was interviewed about the evolving relationship between the litigation finance industry and the insurance sector. As the litigation finance industry matures, its connections with insurance are becoming more significant.

As seen in this article:

“Large insurance carriers are often in the business of litigation, and individual policyholders may argue that litigation funding is essential because, in their view, defendants often have unlimited resources, so having a tool to level the playing field is crucial, said Scott Greenspan, a policyholder attorney with Sills Cummis & Gross.

“At the same time, the insurance industry paradoxically voices concerns about litigation funding, experts say, because of a belief among some that using third-party funds in lawsuits might encourage frivolous litigation, which could potentially lead to higher, and more frequent, insurance payouts.

“Greenspan said while some concerns about the litigation financing industry are valid, a common talking point that third-party investment in cases could lead to funders controlling the litigation and settlement terms is exaggerated.

“‘I’ve been on cases that are litigation funded and I’ve never had a situation in any of my personal experiences where a litigation funder ever had control over what happened in the case,’ he said. ‘I can’t speak for all cases in an industry that is not fully regulated, which appears to be a source of considerable concern to insurers and their counsel.’”