Litigation Finance in the Public Interest

In the United States, public interest organizations play a vital role in promoting access to justice and private enforcement of the law. Nevertheless, these organizations face considerable financial constraints in litigating for their causes. While the non-profit sector and private bar provide commendable support through grants and pro bono assistance, this Comment suggests that this financing model does not adequately meet the needs of organizations that undertake expensive litigation efforts on behalf of their clients. In an effort to alleviate this burden, this Comment puts forth an alternative model of funding public interest litigation by merging social entrepreneurship with the newly revitalized practice of litigation finance. Specifically, it proposes that a litigation financing firm organize as a benefit corporation to provide funding for public interest litigation in exchange for a share of any monetary relief generated. This arrangement has the potential to pair a growing community of investors interested in making a social impact with plaintiffs of worthwhile causes, and in the process, ensure greater access to justice and private enforcement of the law. Additionally, it may invigorate a growing litigation finance sector to fund cases that it has thus far chosen not to support.INTRODUCTIONSo much of what lawyers do depends on the resources of their clients-a reality that seems obvious to practitioners today. Yet, the United States has largely failed to address, or even make inroads in, "the problem of access to justice."1 One estimate offers a particularly bleak portrayal of the issue: out of the 45 million low-income individuals eligible for legal aid, there are only five to six thousand lawyers available to serve their legal needs.2 Meanwhile, commentators continue to call upon the profession to make a greater pro bono commitment,3 and current proposals aimed at expanding access often fail to provide an adequate level of reform.4Nevertheless, public interest organizations play a considerable role in promoting access to justice in our legal system.5 Whether it is through direct legal aid services or impact litigation cases, public interest organizations, by definition, "advance the interests and causes of constituencies that are disadvantaged in the private market or the political process relative to more powerful social actors."6 The United States often recognizes such interests by embracing private enforcement of the law-that is, Congress frequently authorizes its citizens to enforce statutory rights and regulatory objectives through private rights of action.7 Much of the time, public interest organizations provide the necessary legal representation for these citizens to vindicate their claims.8However, public interest organizations face financial challenges that make it difficult to fully improve access to justice and promote private enforcement of the law. A number of scholars surveying the field have found that direct legal service providers lack resources,9 and even the most well-funded groups operate with budgets that fail to allow for lasting and meaningful reform.10 These constraints are often due to inadequate sources of funding for the organizations' activities,* 11 with a large part of their budgets consumed by expensive litigation efforts.12 This resource-constrained public interest sector, when paired with a legal system already lacking adequate access to justice, raises the prospect that the law is enforced with much less vigor than would otherwise be expected. In turn, the financial mechanisms available to fund public interest organizations become all the more important.Recently, the United States has seen a renewed interest in finance that is both for-profit and socially motivated. While these "social entrepreneurs" are not a unanimous or uniform group,13 many of them agree that funding social causes is too often a purely non-profit endeavor, but also recognize that traditional business entities often focus exclusively on profit and shareholder value. …