International Legal Finance Association

Core Mission

ILFA’s core mission is to engage with legislative, regulatory and judicial interests to ensure that legal finance is understood objectively and treated reasonably when under consideration by those authorities.

The principles on which ILFA’s approach to its core mission will be based include:

• Legal finance transactions are overwhelmingly private bargains between commercial entities.
  Commercial legal finance in private commercial actions represents a corporate finance transaction between private parties. Just as other capital transactions with commercial parties are free to be conducted on whatever terms are agreed between the parties, so, too, should commercial legal finance transactions.
  
• Regulation of the activity and not the actor. It is for individual jurisdictions to determine whether and how to regulate financial activity occurring within that jurisdiction and ILFA does not purport to take a view on any jurisdiction’s overall financial services regulatory regime. However, regulation should not be based on who the actor is (a “litigation funder”, for example) and must instead be based neutrally on the activity (“providing risk capital”, for example). There is no basis for singling out providers of commercial legal finance for enhanced regulation when banks, law firms, hedge funds and private investors can engage in the same effective economic activity with different or lesser regulation.
• Disclosure. The use of legal finance in a private action by a commercial client is a private matter that should not be disclosed to anyone.  In the rare event that a court requires disclosure, it should occur ex parte and in camera and the disclosure should be carefully tailored to address the court’s concern. The economic terms of litigation finance arrangements represent protected assessments of legal risk and should not be disclosed to the funded party’s opponents.
• Capital-related regulation. Raising and managing external capital is subject to extensive regulation in many jurisdictions. ILFA supports investor protection regulations as long as they are not specific to legal finance and believes they should be complied with in all respects.
• Consumer litigation funding. ILFA members are not engaged in individual retail consumer litigation funding, an entirely separate industry that is subject to relevant consumer finance regulations.
• Group, class or collective actions. Group, class or collective actions differ from private actions in that the class members are not necessarily in a position to manage the action and make the appropriate economic decisions about it. Thus, unlike in private actions, a court often finds itself in the position of needing to supervise such actions more closely. ILFA recognizes and supports this distinction as long as it is conducted on a neutral basis.
• Insolvency matters. In many instances the court or court appointee supervising an insolvency proceeding will appropriately need to consider or approve a legal finance arrangement to protect the rights of absent creditors.