Reevaluating Proposals for Tort Claims Markets in a World of Mass Tort Litigation

I. Permitting the Sale of Tort Claims as an Alternative Form of Litigation Financing 301A. The History of Prohibitions Against the Sale of Tort Claims 301B. Evaluating Proposals to Establish Tort Claims Markets 303C. Common Arguments for the Sale of Tort Claims 3051. Increased Victim Compensation 3052. Equalizing the Power Disparity Between Plaintiffs and Defendants 3073. Existing Forms of Claim Transfer 308D. Common Arguments Against Tort Claims Markets 3101. Tort Claims Markets Would Spur Frivolous Litigation 310 2. Tort Claims Markets Raise Legal Ethics Problems.3113. Alienability of Tort Claims and Individual Justice..312II. Reevaluating the Debate over Tort Claims Markets in Light of the Rise of Mass Tort Litigation 314A. An Overview of Mass Torts 314B. Reevaluating the Debate over Selling Tort Claims in Light of Features of Mass Tort Litigation 3161. The Trend Towards Aggregation and Settlement in Mass Torts 3162. How a Market for Tort Claims Comports with Mass Tort Litigation 317a. Economies of Scale and Reducing Transaction Costs 318b. Reducing Organizational and Ethical Difficulties 3183. Individual Justice in Mass Tort Litigation 3204. Systemic Effects of Tort Claims Markets on Mass Tort Litigation 321III. Conclusion 322Third-party financing of litigation has, in recent years, emerged as a heated area of debate. 1 Proposals to relax state champerty restrictions and legal ethics rules in order to allow investors to purchase and then pursue tort claims have not traditionally found receptive audiences for a variety of reasons.2 The concept of selling one's tort claim is discomforting; it conflicts with our traditional notion of a lawsuit.3 Furthermore, there are concerns that such reform would spur frivolous litigation, an objection often applied to third-party financing as a whole.With the rise of mass tort litigation, however, proposals that would open up a market for tort claims deserve reevaluation. Mass tort litigation is different than the traditional single-party dispute, especially with regard to aggregation and settlement, and it implicates different public policy concerns.5 In this Note, I argue that permitting the sale of mass tort claims comports with the framework of mass tort litigation, and that such proposals deserve serious consideration as possible solutions to some of the problems posed by mass torts.In Part I, I give an overview of the restrictions on the assignment of tort claims and examine both sides of the debate over whether these restrictions should be repealed to allow a market for tort claims to develop. In Part II, I describe the unique features of mass tort litigation and, in light of them, reevaluate the debate over tort claims markets. I conclude that, with the rise of a streamlined litigation model that emphasizes efficiency, aggregation, and settlement, at the expense of individualized litigation, the objections to the sale of tort claims lose traction. Moreover, creating a market for tort claims aligns with the concerns posed by mass tort litigation, and, therefore, such proposals warrant consideration as attempts to address the issues facing mass tort litigation.I. Permitting the Sale of Tort Claims as an Alternative Form of Litigation FinancingA. The History of Prohibitions Against the Sale of Tort ClaimsModern prohibitions against the acquisition of part or all of a tort claim have their roots in the ancient English common law prohibitions of maintenance and champerty. Maintenance is an officious intermeddling in a suit that no way belongs to one, by maintaining or assisting either party with money or otherwise, to prosecute or defend it. …