Discovery of Litigation Funding Documents

Discovery of Litigation Funding Documents

As a result of the coronavirus, many businesses are inevitably slowing down. By contrast, some businesses are experiencing an uptick in business as a result of the current pandemic. One such business is litigation funding.  Litigation funders enable a person involved in a lawsuit to litigate or arbitrate without having to pay for it. Litigation funders can pay some or all of the costs and expenses associated with a dispute in return for a share of the proceeds of the dispute if it is successful. If the suit is not successful, the litigation funder bears the costs it has agreed to fund.

Given the economic downturn in the midst of the coronavirus, law firms and litigants are increasingly contacting litigation funders with inquiries in an effort to shift the financial risks inherent in lawsuits. A common question now posed to litigation funders during these recent inquiries is whether the documents shared with a litigation funder can be discovered. This article discusses how courts typically rule on the issue as to whether documents shared with litigation funders are discoverable.

Courts Typically Apply the Work Product Doctrine to Protect Litigation Funding Materials.

The work product doctrine applies to materials prepared in anticipation of litigation or trial.

This doctrine provides attorneys with a “privileged area within which he [or she] can analyze and prepare his [or her] client’s case.” (United States v. Noble (1975) 422 U.S. 225, 238.) Work product protection is usually asserted over materials reflecting an attorney’s legal analysis, theories, and litigation strategies.

When a litigation funder is determining whether to fund a suit, it will complete its due diligence to evaluate risk, strengths and weaknesses, likelihood of success, potential recovery, and litigation strategies. This process includes the litigation funder speaking with the attorney overseeing the case and a review of the related public and nonpublic documents. Some of these documents may reflect counsel’s impressions of the strengths, weaknesses, and value of various claims and defenses.

Given the above scenario, when deciding whether such documents or communications are discoverable, many courts agree that attorney work product provided to a litigation funder — particularly when done pursuant to a nondisclosure agreement or confidentiality agreement — is protected and off-limits from discovery.[1] Although not a requirement for applying work product protection in all jurisdictions, these agreements formalize and memorialize the parties’ understandings regarding disclosure, thereby minimizing “the opportunity for potential adversaries to obtain the information.”[2]

Courts Seldom Apply the Attorney-Client Privilege to Protect Litigation Funding Materials.

Courts are less willing to shield materials shared with a litigation funder from discovery if the materials are protected only by the attorney-client privilege. While the work product doctrine protects materials prepared in anticipation of litigation, the attorney-client privilege protects communications made in confidence between an attorney and a client for the purpose of obtaining or providing legal advice.

Litigation funders fall outside the attorney-client relationship. Thus, the attorney-client privilege is typically waived for information shared with the litigation funder unless an exception to the privilege applies. However, because the primary focus of the attorney-client privilege is the provision or receipt of legal advice, most courts addressing the issue have held that sharing attorney-client privileged materials with a litigation funder waives privilege because the parties’ shared interest is financial — to secure funding — and not legal.[3]

Relevance Can Serve as an Additional Basis for Courts to Shield Litigation Funding Materials from Discovery.

Courts will frequently shield litigation funding materials from discovery on the ground that such materials are irrelevant to the claims and defenses at issue in the litigation.

Attorneys have crafted novel arguments as to the scope of relevance in an effort to obtain litigation funding materials in discovery. However, courts have explained that there is only a “narrow category”[4] of cases where litigation funding materials are relevant, and in those cases, the discovering party must provide objective evidence that its “theories of relevance are more than just theories.”[5] Thus, speculation alone will not satisfy the burden for compelling discovery. In the limited situations where courts have permitted litigation funding discovery based on the particular facts and circumstances of the case, they have consistently taken a protective view by placing strict limitations on the scope of allowable discovery.


In order to optimize the chance of success in obtaining copies of litigation funding documents, a party should use discovery mechanisms to confirm whether any nondisclosure agreement or confidentiality agreement was entered into prior to sharing documents with the litigation funder. If no such agreement exists, there is an argument the work-product doctrine may not apply.

Parties should forcefully argue the attorney-client-privilege does not apply. Parties should also make every effort to obtain materials in which the only reasonable objection to its discovery is that it is protected under the attorney-client privilege.

Finally, parties should be prepared with fact-based arguments as to how the particular litigation funding materials are relevant.


[1] Lambeth Magnetic Structures, LLC v. Seagate Tech. (US) Holdings, Inc. , Nos. 16-538, 16-541, 2018 WL 466045, at *5–6 (W.D. Pa. Jan. 18, 2018) (denying discovery of communications with potential litigation funders because they were made for the purpose of preparing for litigation) and United States v. Homeward Residential, Inc. , No. 4:12-CV-461, 2016 WL 1031154, at *6 (E.D. Tex. Mar. 15, 2016) (upholding work-product protection in denying motion to compel discovery of litigation funding information).

[2] Miller UK Ltd. v. Caterpillar, Inc. (2014) 17 F. Supp. 3d 711, 736.

[3]  Cohen v. Cohen , No. 09 Civ. 10230 (LAP), 2015 WL 745712, at *3–4 (S.D.N.Y. Jan. 30, 2015) (finding communications between plaintiff and litigation funder not privileged despite the existence of an executed “joint interest” agreement because the two shared a common financial interest in the outcome of the litigation, not a shared legal strategy); Miller UK Ltd. v. Caterpillar, Inc. , 17 F. Supp. 3d 711, 733 (N.D. Ill. 2014) (holding plaintiff waived attorney-client privilege over documents shared with prospective funders because plaintiff’s purpose was to secure funding and not to obtain legal advice or litigation strategies).

[4] V5 Techs. v. Switch, No. 2:17-cv-2349-KJD-NJK, 2020 WL 1042515, at *1 (D. Nev. Mar. 3, 2020); see also V5 Techs. v. Switch, No. 2:17-cv-02349-KJD-NJK, 2019 WL 7489108, at *4 (D. Nev. Dec. 20, 2019) (rejecting defendant’s “attempts to poke holes in [plaintiff’s] showing of irrelevance [of litigation funding materials] by grabbing its baton, trumpets, and costumes to put on its own parade of horribles here”).

[5] VHT, Inc. v. Zillow Grp., Inc. , No. C15-1096JLR, 2016 WL 7077235, at *1–2 (W.D. Wash. Sept. 8, 2016) (denying litigation funding discovery “[w]ithout some objective evidence that any of [defendant’s] theories of relevance apply to [the] case”); see also MLC Intellectual Prop., LLC v. Micron Tech., Inc. , No. 14-cv-03657-SI, 2019 WL 118595, at *2 (N.D. Cal. Jan. 7, 2019) (denying litigation funding discovery on relevance grounds in the absence of a “specific, articulated reason to suspect bias or conflicts of interest”).

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