How Investors Are Turning Lawsuits Into Their Next Gold Rush

In a report for 60 Minutes, Lesley Stahl explores the rapid rise of litigation funding — an industry where investors bankroll lawsuits in exchange for a share of any settlement or judgment. The segment examines real-world consequences, from a family farm facing ruin to anonymous billionaires secretly financing high‑stakes litigation. For more from the broadcaster, visit the 60 Minutes channel.

What is litigation funding?

Litigation funding (often called pre‑settlement funding or third‑party litigation finance) is simple in concept: an investor pays the legal and living expenses of a plaintiff who otherwise cannot afford to pursue a claim. In return, the funder receives an agreed percentage of any settlement or judgment. If the case loses, the funder gets nothing.

As Christopher Bogart, CEO of Burford Capital, explains, these arrangements are typically structured as non‑recourse financing: “What it means is that if the case that we’re financing doesn’t succeed, then we don’t get our money back.” That safeguards plaintiffs from repaying advances on losing cases, but it also explains why funders seek large returns when they win.

Case study: a family farm, a $23 million verdict, and a rescue loan

Lesley Stahl’s report begins in Ventura County, California, where Craig Underwood’s family had grown jalapeños for three decades. When their sole buyer, Huy Fong Foods (maker of Sriracha), abruptly cut ties in 2016, Underwood sued for breach of contract and won a $23 million judgment. But Huy Fong appealed, freezing collection and pushing the farm to the brink.

Short on cash to continue the fight, Underwood accepted a $4 million advance from Burford. When the appeal was successful, the payout had to be split to cover attorneys’ fees and the funder’s return. Underwood recalls giving Burford $8 million to square accounts — a result he describes without calling it predatory, saying instead that the funder “stepped in and helped us out when we couldn’t have gotten money from anybody else.”

How big are these investments?

Burford, founded in 2009, is one of the largest players with billions invested across many cases. Bogart told the report that single litigation financings are rarely below $5 million and often much larger. He also claimed that, on average, Burford “largely double[s] our money.”

Who funds lawsuits — and how transparent are they?

The market includes specialized firms like Burford, hedge funds, sovereign wealth funds, and wealthy individuals. Deals are usually confidential and funders often remain anonymous in court. That secrecy can change the incentives of litigation: funders can prolong cases, push for trial rather than early settlement, or — for smaller cases — demand high fees that dramatically reduce plaintiffs’ recoveries.

High-profile example: Peter Thiel and the Gawker case

The industry gained national attention when billionaire Peter Thiel secretly funded Hulk Hogan’s invasion of privacy lawsuit against Gawker. The case led to a judgment that contributed to Gawker’s bankruptcy — and it underscored how anonymous third‑party funding can change courtroom dynamics and broader media consequences.

Pre-settlement advances and small‑case pitfalls

Not all litigation funding targets large, complex commercial disputes. A separate market offers quick cash to individuals involved in personal‑injury or compensation claims. Ads promise cash “in as little as 24 hours,” pitched to plaintiffs who need money for rent, medical bills, or daily living.

Those advances are non‑recourse, but the fees can be staggering. The report highlights former NYPD officer Donald Sefsik, who was entitled to $90,000 from the 9/11 Victim Compensation Fund. He took a $10,000 upfront payment and later accepted a $25,000 advance from R&D Legal Funding, only to find the repayment terms opaque. After settlement he repaid $64,800 — leaving him with about $30,000 of the original $90,000.

R&D Legal later settled with the New York Attorney General, providing debt relief and changing business practices. Still, cases like Sefsik’s illustrate how plaintiffs with clear entitlements can be charged rates that would be illegal under conventional usury laws if they were loans rather than investments.

Ethical concerns and calls for regulation

One of the report’s central points is that litigation funders are not regulated like lenders or financial advisors, and there is limited transparency about who bankrolls litigation and under what terms. University of Iowa law professor Maya Steinitz warns that funders “are not regulated” and that there’s “nothing precluding them legally from pressuring a client to settle.”

“Accessing the courts in a civil process is a luxury good in today’s America,” said Steinitz. “Lawyers charge hundreds of dollars by the hour… Litigation funding is essential. However, personally, I think that litigation funding should be regulated.”

The U.S. Chamber of Commerce — representing many large corporate defendants — has been vocal in pushing for disclosure and regulation, arguing that funders give plaintiffs the resources to persist and to bring larger claims against big businesses. Ironically, a faction that typically opposes regulation supports it here.

Balancing access to justice and consumer protection

Supporters of litigation funding argue it democratizes access to courts by providing a lifeline to plaintiffs who otherwise could not afford to sue. Critics point to opaque deals, potentially predatory rates for vulnerable individuals, and the power shift that arises when outside investors, rather than the injured party, have the deepest financial stake.

• Potential benefits: funds litigation costs, levels the playing field against deep‑pocket defendants, enables meritorious claims that would otherwise be abandoned.
• Key risks: lack of transparency, possible pressure on plaintiffs or lawyers, high effective costs for small plaintiffs, anonymity in court.

What could change?

The debate centers on transparency and oversight rather than an outright ban. Proposals discussed by legal scholars and some policymakers include:

1. Mandatory disclosure in court of third‑party funding arrangements.
2. Consumer protections for small‑dollar advances to prevent unconscionable effective rates.
3. Ethics guidance to prevent funders from exerting improper influence on litigation decisions.

As Maya Steinitz summarized, litigation funding “should be regulated, but… not prohibited.” The industry provides important access to justice, yet without clearer rules and transparency it also creates opportunities for abuse.

Conclusion

Lesley Stahl’s 60 Minutes report paints a nuanced picture: litigation funders can rescue deserving plaintiffs and enable large, complex cases to proceed, but the current patchwork of confidentiality and weak oversight leaves room for predatory practices and hidden influence. Policymakers, courts, and legal organizations face the challenge of preserving access to justice while protecting vulnerable plaintiffs and preserving the integrity of the judicial process.

For the full report, watch the 60 Minutes segment and visit the 60 Minutes YouTube channel.