A CALL FOR REGULATING THIRD-PARTY DIVORCE LITIGATION FUNDING

Abstract

While many scholars have evaluated the effects of third-party litigation funding in general, none have focused their analysis specifically on third-party divorce funding. Divorce funding raises unique issues because of underlying policy concerns that are not implicated with commercial claims. Specifically, the public policy to maintain the strength and stability of marriage compels careful consideration before allowing divorce funding to become a nation-wide, common practice. Section II provides a brief overview of the current usage of third-party litigation funding with a focus specifically on divorce funding. Additionally, Section II examines some of the laws governing divorce funding and how divorce funding implicates policy concerns not present with other areas of litigation funding. Section III acknowledges certain benefits of divorce funding and analyzes the societal and personal costs of its use. Due to the lack of laws regulating the practice, investors are granted almost complete free-reign regarding the contractual terms of the advance. Section III also explores the negative effects that are likely to occur with the continuation of unregulated divorce funding, including an increase in the quantity and cost of divorce proceedings, a heavier burden on society as a result of the increased number of divorces, and lenders influencing the litigation inappropriately and encouraging more spending than necessary. Finally, Section IV proposes a two-front solution, focusing on a call to action by state legislatures to regulate divorce funding to prevent harmful effects that will almost undoubtedly arise if left unchecked.