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  • Writer's pictureKirk Hartley

New Opinion Relating to Litigation Funding, Joint-Interest and Legal Privilege

This AmLaw article by Andrew Longstreth addresses a new opinion on privilege in the context of case with litigation-funding in place. The article is well worth reading for background, but seems to me a bit gloomier than is warranted as to the impact for litigation funding. The article also is amusing for the addition of a later comment offered by the US Chamber of Commerce, which is NOT a fan of litigation-funding.

The opinion is an appeal from a ruling by a magistrate judge, so of course review was limited and deferential. The district court opinion is here. I’ve not yet obtained the prior ruling, but will add it when possible. The key exceprts on privilege are as follows, and indicate that Judge Farnan sees the law as open to development in this area:

"Judge Stark noted that the state of the law regarding common interest is unsettled and that this case presented a close question. (Tr. at 65:24 66:3.) He then conducted a survey of cases demonstrating the differing views within the Third Circuit on "how common the supposed common interests have to be," and noted the apparent trend favoring Facebook’s position. (Tr. at 66:4-68:5; 69:15-18.) Although Leader summarily contends that the Order was clearly erroneous because documents were exchanged after a common interest was created, Leader has made no argument, and the Court has no basis on which to conclude, that Judge Stark misapplied the relevant law. Moreover, Judge Stark took into consideration that Leader had the burden of establishing the exisstence of the privilege, and the numerous policy considerations, including the need for litigation financing companies and the truth-seeking function of litigation. (Tr. at 69:19-70:16.) Additionally, Judge Stark looked to ethical guidelines from both Pennsylvania and New Jersey suggesting that privilege may be waived in a situation such as this. (Tr. at 70:17-71:22.) Aside from disagreeing with the outcome, Leader has failed to argue that there are any specific deficiencies or flaws in the ruling. In light of the thorough and well-reasoned analysis conducted by Judge Stark, the Court cannot conclude that the March 12, 2010 Order was clearly erroneous."

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