OAN Commentary by: Adonis Hoffman
Friday, January 23, 2026
A new and somewhat invisible group of powerful outsiders have come to wield immense influence over some of America’s top companies. They are not shareholders, regulators, or customers. Private equity and foreign-backed litigation funding is quietly weaponizing U.S. courts, driving up costs for American businesses, threatening economic sovereignty, and passing the bill to consumers
Third-party litigation funders, a small but growing class of investors and financiers in the U.S. and abroad, are bankrolling high-stakes, high-dollar lawsuits against major U.S. companies, often in the form of major class actions. Corporations, including ExxonMobil, Chevron, and Johnson & Johnson among others, have all felt the pressure of these powerful new players in America’s civil justice system, and few companies have anything good to say about them.
Litigation finance firms exist for one reason, and one reason alone: to profit from other people’s lawsuits. They do not build factories or farms. They do not hire workers, invent products, or serve customers. They do not innovate or take entrepreneurial risk in the traditional sense. What they do, instead, is put big dollars behind major lawsuits and, in return, take a healthy portion of any settlement or court award, often the majority share.
By injecting vast sums of outside capital into the legal system, litigation funders enable lawsuits to grind on for months or years, some of which are meritorious, some marginal, and many simply frivolous. Facing staggering legal costs, American companies are often forced to divert resources from growth, hiring, and innovation toward legal defense. In extreme cases, companies settle not because they are wrong, but because the financial and reputational toll of prolonged litigation becomes intolerable.
While litigation funding is often marketed as virtuous, its real-world effect is far different. In practice, it is transforming America’s civil justice system into something closer to a casino, where lawsuits are bets, verdicts are jackpots, and the broader public ultimately pays the price. Litigation, once a means of resolving disputes and compensating genuine harm, is becoming more and more of a speculative asset, in essence, one more financial instrument to be traded, leveraged, and optimized for return.
The Financialization of Justice
Throughout American history, lawsuits were relatively straightforward matters. Someone was wronged. A claim was filed. The parties bore their own risks. If the facts and the law supported the case, it moved forward. If they did not, it ended. The system was imperfect, but its purpose was clear: justice, accountability, and resolution.
That balance is gone.
Today, the civil justice system is being financialized. Hedge funds, private equity firms, and specialized investment vehicles now approach litigation the same way they approach distressed debt, commodities, or complex derivatives. Lawsuits are screened, priced, modeled, and financed. Capital is advanced to cover legal fees, expert witnesses, discovery costs, and years of appeals. In exchange, funders demand a substantial share of any settlement or verdict.
Proponents cloak this practice in the language of fairness, claiming it allows “Davids” to challenge “Goliaths.” In reality, this narrative often collapses under scrutiny. Modern funding arrangements frequently saddle plaintiffs with high-interest obligations or force them to surrender strategic control to financial backers whose primary concern is yield, not justice. This is not philanthropy. It is speculation.
To be sure, the biggest problem lies not in consumer litigation funding, but in large-scale commercial third-party litigation finance. Here, incentives change fundamentally. Cases no longer turn primarily on legal merit or factual strength, but on projected returns, leverage, and settlement pressure. Funders are not interested in closure. They are interested in maximizing payout. The longer a case drags on, the greater the pressure to settle regardless of fault. Litigation strategy becomes less about truth and more about endurance. Justice becomes secondary to yield.
The Shadow Board Effect
These investors are not driven by fairness. They are driven by return on capital. They do not ask whether a claim is just or whether a defendant is culpable. They ask whether a case can generate an attractive payout. Because they have no moral stake in the outcome—no reputational exposure, no operational consequences, no public accountability—everything about the litigation process changes.
When a company is sued today, the party across the table is often not an injured individual seeking redress. It is a sophisticated financial actor assessing risk, leverage, and settlement scenarios. The lawsuit itself has been modeled, managed, and optimized on a balance sheet.
Behind the scenes, unseen investors increasingly influence litigation strategy. They help decide whether a case settles quickly or is deliberately prolonged. They favor aggressive discovery to increase cost and pressure. They encourage appeals, procedural maneuvering, and delay. Unlike businesses, they are not constrained by quarterly earnings, employee morale, customer relationships, or public trust. Time works in their favor.
That pressure lands squarely on American companies. As corporate leaders face the challenges of innovation, competitiveness, investment, and job creation, many are instead managing perpetual legal exposure backed by capital that never tires, never compromises, and never quits. Even weak cases can become existential threats when funded by investors with the resources to grind defendants down over years. Faced with that reality, many companies make a rational choice: settle early, settle quietly, contain the damage, and move on.
The Invisible Tax on Society
The damage does not stop at the corporate level. It spreads outward until every American pays the price. This system imposes what amounts to an invisible tax embedded in daily life.
When insurers face massive, unpredictable verdicts fueled by litigation funding, they raise premiums. Auto insurance climbs. Medical malpractice coverage spikes. Small businesses face higher liability costs. Hospitals pass expenses to patients. Retailers adjust prices. Energy companies price in legal risk. Supply chains absorb the cost and transmit it downstream. What begins as a lawsuit in a distant courtroom ends up as a higher bill in an American household.
So-called “nuclear verdicts” do not punish corporations in isolation. They ripple through the economy, weakening U.S. competitiveness. Research from the U.S. Chamber of Commerce Institute for Legal Reform estimates the annual cost of the U.S. tort system at roughly $443 billion—more than $3,600 per household.
A Matter of National Security
One of the most disturbing aspects of third-party litigation funding is not the money. It is the secrecy.
In many jurisdictions, funders are not required to disclose their involvement. Judges may not know who is financing a case. Juries are kept entirely in the dark. Defendants may have no idea whether they are facing an individual plaintiff or a sophisticated financial syndicate operating behind the scenes.
This secrecy elevates the issue beyond business and trial lawyers. There is no meaningful barrier preventing foreign capital, including sovereign wealth funds or adversarial state actors, from financing American lawsuits. In an era of economic rivalry and geopolitical tension, such actors could use litigation funding as a form of lawfare, targeting U.S. energy, aerospace, or technology firms to drain resources and slow innovation. Allowing anonymous foreign capital to weaponize American courts should alarm anyone who takes sovereignty and the rule of law seriously.
Transparency
Congress has noticed. Over multiple sessions, lawmakers have introduced versions of the Litigation Funding Transparency Act, which would require disclosure of third-party litigation funding in federal cases, particularly class actions and multidistrict litigation. Related proposals would give judges clearer authority to examine funding arrangements for conflicts of interest and improper influence. None has yet become law.
Momentum is building, nonetheless. States are moving faster than Washington. Insurers are pressing for reform. Judges, policymakers, and corporate risk officers are beginning to grasp the economic and national-security implications of secret litigation funding. What was once dismissed as a procedural curiosity is now understood as a structural problem.
America’s courts were designed to deliver justice, not to function as an investment platform for anonymous global capital. When litigation becomes a tradable asset, the courtroom ceases to be a forum for truth and becomes a tool for leverage. Outcomes are shaped less by law and fact than by capital endurance and financial strategy.
Transparency is the remedy. Mandatory disclosure is not radical or partisan. It is common sense. If an outside financier is backing a lawsuit, the court deserves to know. The jury deserves to know. The opposing party deserves to know. And the public deserves to know. Disclosure does not ban litigation funding. It does not prevent legitimate claims. It restores honesty to the process. It allows judges to manage conflicts, juries to weigh motivations, and lawmakers to assess systemic risk. Most importantly, it draws a necessary line between justice and gambling.
America’s legal system is one of our nation’s greatest strengths. But when justice is hijacked by financial speculation, trust erodes. Courts were never meant to function as casinos, and justice was never intended to be a financial instrument. It is time to turn the lights on. It is time to reclaim the courts before justice itself becomes just another roll of the dice.
(Views expressed by guest commentators may not reflect the views of OAN or its affiliates.)
Adonis Hoffman is a lawyer, analyst, and independent counsel who served in senior roles at the FCC and in the U.S. House of Representatives
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