Jul 15 / Aladdin

What Is Third-Party Litigation Funding and Why Are Trucking Companies Talking About It?

If you've been following recent trucking industry news, you've probably heard more discussion about third-party litigation funding.

What Is Third-Party Litigation Funding?

Third-party litigation funding is when an outside company or investor provides money to help finance a lawsuit in exchange for a portion of the settlement or verdict if the case is successful.

Instead of only the plaintiff and their attorney being financially involved, a third party also has a financial interest in the outcome of the case.

This type of funding is used across many industries and types of civil litigation, including commercial trucking lawsuits.

How Does Third-Party Litigation Funding Work?

The process is relatively simple.
  1. A plaintiff files a lawsuit.
  2. A litigation funding company agrees to finance some or all of the legal costs.
  3. If the lawsuit is successful, the funding company receives a percentage of the settlement or verdict.
  4. If the lawsuit is unsuccessful, the funding company may receive nothing, depending on the agreement.

For plaintiffs, litigation funding can provide access to financial resources that allow them to pursue cases they otherwise couldn't afford.

Why Is It Becoming a Concern in the Trucking Industry?

The trucking industry has seen a growing number of high-dollar verdicts and settlements over the past decade.

Many industry organizations believe third-party litigation funding may contribute to this trend by allowing outside investors to finance lengthy and expensive legal battles.

Critics argue that because litigation funders only profit when cases result in a settlement or verdict, they may have an incentive to support larger claims and discourage early settlements.

Supporters, however, argue that litigation funding helps level the playing field by giving injured individuals access to the financial resources needed to pursue legitimate legal claims against larger companies.

As a result, third-party litigation funding has become one of the most debated topics in transportation law.

Why Do Some People Compare It to "Gambling on Lawsuits"?

One of the biggest criticisms of third-party litigation funding is that it allows outside investors to profit from the outcome of legal disputes.

Instead of investing in businesses or real estate, litigation funders invest in lawsuits, expecting a return if the case results in a settlement or verdict. Because of this financial model, critics often compare third-party litigation funding to "gambling on lawsuits."

Beyond the legal debate, some organizations have also raised concerns about its broader economic impact.

For example, a December 2025 study by The Perryman Group estimated that third-party litigation funding contributes to:

  • $35.8 billion in direct annual economic losses
  • $54.2 billion in lost U.S. gross product
  • More than 454,000 jobs eliminated
  • An estimated cost of about $607 per U.S. household each year 

Supporters of third-party litigation funding disagree with the "gambling" characterization. They argue that litigation funding helps individuals pursue legitimate legal claims they otherwise could not afford and improves access to justice.

As more states evaluate the role of third-party litigation funding, the debate continues over whether it primarily expands access to the legal system or creates additional financial incentives that can influence how lawsuits are financed and resolved.

Why Are States Starting to Pass New Laws?

Several states have recently introduced or passed legislation aimed at increasing transparency around third-party litigation funding.

These laws vary by state but generally focus on issues such as:

  • Requiring litigation funding agreements to be disclosed
  • Restricting foreign governments or foreign-owned companies from funding lawsuits
  • Increasing oversight of litigation funding companies
  • Limiting or prohibiting certain forms of third-party litigation funding

Lawmakers supporting these measures say they are designed to improve transparency and reduce outside influence in civil litigation.

What Could This Mean for Trucking Companies?

While the long-term impact remains uncertain, these legislative changes could influence how trucking lawsuits are financed and managed in the future.

For motor carriers, this could potentially affect:
  • The length of litigation
  • Settlement negotiations
  • Lawsuit transparency
  • Legal costs
  • Overall risk management

As additional states consider similar legislation, trucking companies should stay informed about these developments.

Frequently Asked Questions

What is third-party litigation funding?

Third-party litigation funding is when an outside company finances a lawsuit in exchange for a portion of any future settlement or court award.

Is third-party litigation funding legal?

Yes. It is legal in many states, although laws vary by jurisdiction and several states have recently introduced new regulations.

Why is the trucking industry concerned?

Some trucking organizations believe outside litigation funding may contribute to larger settlements and longer legal disputes. Others believe it simply helps plaintiffs pursue legitimate claims they otherwise couldn't afford.


Why do some people call it gambling on lawsuits?

Critics use this phrase because litigation funders invest money into legal cases with the expectation of earning a return if the lawsuit is successful. Supporters disagree with this description and argue that litigation funding increases access to justice.


Are states changing their laws?

Yes. Several states have recently passed or proposed legislation increasing transparency or limiting certain types of third-party litigation funding