Funding of Hulk Hogan’s lawsuit illuminates concerns over transparency in the litigation funding industry

27th May 2016

The Recorder reports that Hulk Hogan’s lawsuit against Gawker was funded by billionaire Peter Thiel, bringing to light enduring concerns over disclosure in the litigation funding industry. Thiel is alleged to be funding multiple cases against Gawker, which author Ben Hancock writes is to “exact a personal vendetta”.

While some states in the US prohibit third party litigation funding, it is permitted in others, but the rules about disclosure of funding can often be unclear. The Recorder reports that John Beisner, Partner at Skadden, Arps, Slate, Meagher & Flom LLP, believes that knowing who is behind a lawsuit is a fundamental right that defendants deserve. While Beisner appears to be thinking that Thiel’s funding of Hulk Hogan’s case is “unique”, he has come across cases in the past where companies have funded suits to cause financial harm to a competitor, “even if they don’t directly have a dog in the fight”.

Beisner is quoted in the article as saying, third party litigation funding is “a profit game”, and as saying, “I think the conclusion is, it’s a wonderful investment, because at a minimum [the defendant] is going to pay you something to get out of the damn lawsuit”.

Read more here.