For over a decade, I have been on the front line of the fight against predatory litigation funding in the United States and around the world, sounding the alarm over the commodification of our legal system and access to justice.

Commercial litigation funding remains strikingly opaque: courts, defendants, and the public rarely know who is truly financing a lawsuit or influencing its strategy. Yet the industry has become a formidable force, with U.S. commercial funders alone holding assets estimated at more than $16 billion.

This lack of transparency raises serious concerns about accountability and control. When undisclosed funders back a lawsuit, it is fair to ask what they seek—and who ultimately stands to benefit.

However, after years of sounding the alarm, the tides may be turning.

Last month, North Carolina became the first state in the United States to ban third-party litigation funding outright. Governor Josh Stein signed the Prohibit Litigation Investment Act on June 22, after it passed the House unanimously and cleared the Senate 45 to one — a rare show of bipartisan consensus. The state law has now stepped beyond regulation on rules of exposure to wholly ban the practice.

North Carolina follows a wave of reform at the state level, from Georgia to Oklahoma to Kansas, increasing disclosure, curbing funder control and limiting the influx of foreign capital. U.S. Congress is moving more slowly, but it is moving nonetheless: a federal bill introduced this year would force greater transparency around who is funding litigation and on what terms.

While this is good news, it may be generating new risks abroad. As the U.S. tightens its rules, the capital will relocate abroad. It is already flowing into the most permissive foreign jurisdiction it could find, which is, right now, the United Kingdom.

England has become the highest-risk jurisdiction in Europe for class actions, with the cumulative value of proceedings reaching $167.7 billion into 2024. This is not an accident. It is being driven in no small part by a massive influx of U.S. private capital into the U.K. legal system.

In 2023, the American hedge fund Gramercy Funds Management provided a U.K. law firm, Pogust Goodhead, with a then-record $552.5 million to fund multiple commercial and consumer actions. Repeated further drawdowns have since taken the firm’s debt to Gramercy well over $1 billion.

This has extended into the EU, too. Gramercy is reportedly also behind funded proceedings in the Netherlands — one of the EU’s busiest jurisdictions for class actions — underlining how a single American funder now sits behind mass litigation in Europe.

The trajectory is clear. By some measures, the U.K. is now on course to overtake the U.S. as the most expensive tort system in the developed world, relative to the size of its economy. According to a newly released U.S. Chamber study, U.K. tort costs have more than doubled as a share of GDP since 2024, the fastest growth of any major economy.

This trend will have a major impact of consumers and businesses. The reform debate is too often framed as a fight over access to justice, when in fact it should be about who really profits from the commoditization of justice and the impact it has on tort costs.

The £14 billion consumer claim against Mastercard in the U.K. (2016 – 2026) is a good example. This claim was eventually financed by Innsworth, a firm backed by U.S.-based Elliott Management. Of the eventual £200 million settlement, £68 million was set aside for the funder. Class members were left with the rest to share.

While the funder in the Mastercard case bitterly complained about the settlement, the England and Wales High Court (Lord Justice Males and Mr. Justice Morris) dismissed Innsworth’s complaint and thankfully affirmed that the class action regime exists “for the benefit of class members and not primarily for the benefit of lawyers and funders.”

However, while this example showed some restraint and reasonableness on the part of the judges, the economics of funded class actions are undeniably tilted to reward the third-party investors, not the consumers in whose name the claims are brought. It is all about profits and not enough about fair redress.

The irony of this system is that it may be inflationary. It may be raising legal costs. What is advertised as a solution to high legal costs may, in fact, contribute to even higher tort costs. While defendants could end up paying more, consumers would as well.

With its new Prime Minister, Andy Burnham, the U.K. has a chance to change tack on its laissez-faire approach to litigation finance. The new Attorney General, Ellie Reeves, who reportedly spent her pre-Parliament career as a plaintiffs’ attorney, should undoubtedly understand the effects that third-party litigation financing has on British consumers and tort costs.

For us in the United States, we should also care about what the U.K. government does about this. American capital is contributing to the U.K. class action boom, and U.S. companies are often the targets of these actions. This is not a foreign problem to be watched from a safe distance.

Although U.S. policymakers deserve credit for finally taking meaningful steps to regulate third-party litigation funding, it is troubling that European policy leaders have not followed suit. The U.S. government should press European governments and the European Commission to take this issue seriously, because it affects American businesses and our broader economic interests.

Disclaimer: The opinions and views expressed in this article are those of the author and not necessarily those of The National Law Review (NLR). Please see NLR’s terms of use.