By Russ Banham
Carrier Management magazine
It’s not every day that the chairman and CEO of one of the world’s largest insurance companies issues open warfare against an entire industry. While no one was surprised that Chubb’s Evan Greenberg attacked litigation funding firms for driving up the costs of lawsuits and insurance premiums, his purported threats of negative consequences for partnering organizations that do business with the firms was an extraordinary moment.
In response to Greenberg’s alleged comments, Christopher Bogart, CEO and co-founder of Burford Capital, one of the world’s largest litigation funding firms, told the Financial Times that it was “inappropriate” for a large insurer like Chubb to take its “market power … and try to use it to deny access … to a perfectly legal” market, characterizing such actions as potentially “anti-competitive.” Burford Capital declined an opportunity to be interviewed to assess the accuracy of the news story.
The war of words continued. In late July, an Op-Ed penned by Greenberg and John Doyle, CEO of insurance broker Marsh McLennan, in The Wall Street Journal took aim at litigation funding for encouraging “drawn-out lawsuits to extract big investment returns for themselves.”
Perhaps alluding to Greenberg’s ultimatum, the insurance industry leaders wrote:
“Chubb is looking carefully at our relationships to make sure that the people and companies with whom we do business aren’t helping to fuel the problem. Likewise, Marsh has refused for several years to work on litigation insurance with these litigation funders.” Marsh declined a request to interview Doyle on the subject.
Suffice it to say the battle royale between the two industries has entered a new stage of combat. Carrier Management reached out to several insurance brokers about the alleged warning by Greenberg to stop doing business with litigation funding firms. None were willing to discuss the matter on the record, although an anonymous source from the broking industry had plenty to say.
Other industry participants and observers freely offered their opinions, as did Dai Wai Chin Feman, managing director and corporate counsel at Parabellum Capital, another large commercial litigation funding firm. Feman was especially critical of Greenberg’s alleged threat, commenting, “It seems to me like he’s inciting an illegal group boycott.”
Nevertheless, the accusations and counteraccusations highlight the stark divide between support for the litigation funding industry’s role in enabling people and businesses to pursue litigation against well-funded opponents, and condemnation over its potential to generate outsized settlements and jury verdicts leading to higher insurance premiums.
In what follows, both sides of the hot button issue are presented, beginning with Greenberg’s alleged warning to Chubb’s partnering organizations.
Sticks and Stones
While Greenberg’s alleged remarks may have been extemporaneous, they were likely planned in advance with assistance from Chubb’s PR personnel and legal counsel. “From what I know of Evan, he very much thought through what he was going to say and knew the consequences of his words. He’s very strategic,” said an anonymous source who preferred that we not name their industry. “Although I don’t think he showed the best judgment, he gets a lot right.”
Asked if Greenberg’s alleged comments could be legally construed as anti-competitive, Robert Hartwig, Clinical Associate Professor of Risk Management, Insurance and Finance at the University of South Carolina, was skeptical. “I don’t believe they have the degree of force associated with restraint of trade or a sort of demand that has antitrust implications,” said Hartwig. “I think the industry’s sentiments toward third-party litigation funding are fairly well known. Greenberg and even Doyle has every right to refuse to do business with any organization they feel is detrimental to their business models.”
Asked the same question, the anonymous source from the insurance brokerage industry commented on the absurdity in asking an insurance company’s lawyers, asset managers and fellow industry participants to end their affiliation with an industry most do business with.
“What an utterly ridiculous threat to ask law firms, for instance, to pledge to stop doing business with litigation funding firms; there isn’t a single law firm in the U.S. that does plaintiff-side litigation that has not had some form of litigation funding,” the source said. “Beyond that, there are numerous insurance companies and brokers investing in litigation funding, with an arm or desk or individual in some way investing in legal assets. They [stop doing business with the litigation funders] and they’re on an island unto themselves.”
Feman from Parabellum Capital, a commercial litigation funder of antitrust cases and intellectual property matters, described Greenberg’s alleged comments as “a PR stunt—hopefully,” he said. “Chubb obviously has close relationships with a lot of law firms; are they just going to abandon these relationships? I don’t imagine their partnering organizations are going to violate the rules of professional conduct because [he] is threatening to cut off business with them.”
While Feman said the alleged warning indicates the serious intent of Chubb and possibly other insurers to annihilate the litigation funding industry, were that to happen, insurance companies would squander the PR value of litigation funding as the cause of their problems. “If we went away tomorrow, insurers would need to find some other scapegoat for high-dollar jury verdicts and rising insurance premiums,” he said.
Tom Baker, Henry R. Silverman Professor of Law at the University of Pennsylvania’s Carey School of Law, amplified Feman’s point. “The insurance industry should be careful what it asks for,” he said. “Commercial litigation funders like Parabellum don’t usually fund class actions or personal injury cases. A commercial plaintiff has access to litigation funders to help the company even the playing field against extremely well-funded defendants. Putting them out of business won’t reduce insured losses.”
Insurable Interest
Insurance critics have long contended that litigation funding leads to the filing of speculative and dramatically high-dollar legal outcomes than otherwise would have been the case. They point to a funder’s influence in litigation decisions, swaying plaintiffs towards high jury awards instead of more moderate settlements. By funding sophisticated law firms that charge significant contingency fees, critics argue that the aggregate costs trickle down to increase both personal injury and commercial insurance premiums.
“The cost [of lawsuits] for a litigation funding firm … is to pay the lawyers that brought the class action, rather than the injured parties,” said Andrew Robinson, chairperson and CEO of Skyward Specialty Insurance Group, citing contingency fees that reach 40 percent and 50 percent in some cases. “Not much [money] is left after the lawyers, litigation funding firms and the doctors often expressly brought in to increase the perceived value of the loss take their cuts.”
Hartwig offered a similar perspective. “What litigation funding firms do is insert themselves between the insurer and the policyholder to profit from the loss of the policyholder,” he said. “It’s a perversion of the foundational principle of insurable interest, which is legally required everywhere in the country.” The principle of insurable interest means that any person or entity taking out an insurance policy must have a genuine stake in the well-being of the policyholder.
“The concept ensures that the function of insurance is to protect against unforeseen events and not speculative possibilities akin to gambling,” said Hartwig. “The profit motive for litigation funding firms strikes many people, including judges and juries, as a perversion of the traditional relationships that exist in insurance.”
Apprised of these viewpoints in an email, Feman wrote back that the litigation funding market “exists out of necessity and demand. Litigation is incredibly expensive, and defendants are rarely willing to settle on fair terms before extensive litigation. Companies and law firms use our capital because it makes financial sense. If we didn’t exist, many meritorious claims would never be brought or [the plaintiffs] would settle for unreasonably low amounts.”
Regarding assertions that litigation funding firms push clients toward jury verdicts, he responded, “Unlike many plaintiffs who inhibit settlement, we are rational, non-emotional decision-makers who prefer the certainty of settlement over trial, which is inherently binary and subject to years of appeals, remands and illiquidity.”
Jonathan Stroud, general counsel at Unified Patents, an organization formed to protect against frivolous patent litigation, takes a position in between these extremes. “It’s become this ‘us versus them’ narrative,’ but the truth is that insurers are much better at defending the risks of defendants than they are at insuring the risks of plaintiffs,” he said. “While the insurance industry has solid experience structuring products to insure offensive risks in lines like automobile insurance, carriers have fallen short in insuring the aggressor side in commercial risks like patent litigation, creating an opening for litigation funding.”
The anonymous insurance broking source offered a similar opinion. “Insurance is [a form of] litigation funding for the defense side in commercial lawsuits. Large, well-insured corporate defendants have the bigger war chest and the ability to draw out litigation by making it very costly for smaller corporate plaintiffs,” the source said. “Commercial litigation funding firms tip the scales back in favor of equality by financing the plaintiff side. The insurance industry wants that advantage back.”
Stroud agreed to a point. “Insurers are worried that plaintiffs have deeper pockets, but that’s more in the realm of ambulance chasers, venue-shopping and spooking the defense into settling non-meritorious cases than commercial litigation funding,” he said.
Different Strokes
The differences between commercial litigation funding and consumer litigation funding are often brought up by large commercial litigation firms like Burford Capital and Parabellum Capital that maintain they do not finance plaintiffs in slip-and-fall lawsuits and automobile accidents. As Feman put the difference, “Comparing consumer litigation funding to commercial litigation funding is like saying Chubb and United Healthcare are in the same business. They are both technically insurance, but very different kinds, with very different policy considerations,” he said.
“Insurers like to claim that litigation financing firms fund unmeritorious and frivolous litigation, which is nonsense,” the anonymous broking source said. “These are some of the smartest legal and financial minds in the country. Ninety to 95 percent of the stuff that comes across their desks gets rejected. I’m talking commercial litigation funding, which is fundamentally different than the funders of personal injury class actions promoted on highway billboards. With them, the industry may have a legitimate beef.”
Ian Gutterman, a longtime analyst of the insurance industry on behalf of investors, said that insurers would be better off if they focused their attention on personal injury attorneys financed by litigation funding firms specializing in such lawsuits, and not on commercial litigation funders like Burford and Parabellum. “If I were Evan Greenberg, I would target the attorneys whose faces you see on billboards across Chicago, Florida, Los Angeles, you name it. People would respond to that; the general public doesn’t know what Burford is. I’d go after the ambulance chasers,” he said.
The anonymous broking source echoed the comment. “If the insurers were smart, they would take aim at just the consumer litigation funding and leave the ‘big dogs’ in commercial litigation financing alone. There hasn’t been much subtlety or nuance in … making [commercial] litigation funding the boogeyman for everything people complain about the insurance industry. The target is too broad and that isn’t helping.”
Gutterman said he has no problem personally with commercial litigation funding. “It’s just financing, which is no different than insurance carriers buying reinsurance or issuing a catastrophe bond,” he explained. “These are not nefarious or bad guys. Do they drive up settlements or verdicts and then insurance costs? Yes. Underwriters then need to say, ‘We have this new cost and need to account for it in pricing the risk.’ They’ve got 15 years of experience making it easy to price. Had they done it years ago and been more aggressive then, taking the risk on their reserves, they’d have less to complain about now.”
Death and Taxes
No one expects the industry’s complaints to diminish, particularly after suffering a major legislative defeat seeking to tax the profits earned by litigation funders at the highest individual rate (37 percent), plus an additional 3.8 percent instead of the lower capital gains rate they presently pay in many cases. The bill, Tackling Predatory Litigation Funding Act (S. 1821/H.R. 3512), failed to be included in the final version of President Trump’s “Big Beautiful Bill.” Possibly worse for the industry is the loss of their anti-litigation funding champion, Sen. Thom Tillis (R-NC), who spearheaded the bill and announced after its failure that he would not run for re-election in 2026.
Hartwig attributed the death of the tax bill to the plaintiff trial bar—”the best organized, best funded and best politically connected special interest group in America, bar none,” he said. “Trial lawyers are riding high on the current wave of populism, meaning uphill battles at the federal and state level in terms of obtaining meaningful tort reforms.”
Among those proposed reforms is mandatory and full disclosure of litigation financing agreements, which are generally kept secret. “In most cases, knowing whether there is third-party litigation funding in any given case is impossible,” the U.S. Chamber of Commerce, a longtime critic of litigation funding, stated. “As a result, nobody knows what control or influence the funders have over the underlying litigation or attorneys.”
“Disclosure is a good place to start,” said Jerry Theodorou, director of the Finance, Insurance and Trade Policy Program at the nonprofit public policy think tank R Street Institute. “What makes the insurance industry concerned is that litigation funding is a ‘black box.’ The industry does not know if there is funding in the first place and is also in the dark on the nature of the relationship between the plaintiff attorneys and the funders.”
These blind spots give an unfair advantage to litigation firms. Theodorou said that insurance policies are discoverable, their coverages, terms, conditions and limits available for perusal in litigation—but not litigation funding agreements in patent infringement and antitrust cases. “It’s these kinds of vexatious lawsuits that cause insurance companies to settle instead of facing a court. Is that too much to ask? I don’t think so.”
Hartwig doesn’t think so either, commenting that the goal of disclosure is transparency. “Litigation funding firms want to hide their role in cases because they know the existence of the financing fundamentally influences not only the incentive to bring cases but also the settlement negotiations,” he said. “If a third party seeks to profit from the misfortune of a claimant, there’s no question that a judge and a jury should consider this fact.”
But Feman said that disclosure is merely a “trojan horse” for defendants and their insurers to extract information prejudicing the plaintiff’s case, pointing to budgets, emails discussing case risks and underwriting damage analyses.
And so it goes, accusations and counteraccusations, the war of words attaining a new level of opprobrium. Imagine the next stage if, in fact, many banks, law firms, asset managers and insurance brokers actually do stop doing business with litigation funding firms. Still, it’s doubtful if even that would kill off the industry’s “boogeyman.” As the anonymous source put it, “As long as there is money to be made for litigation funding firms, whether it’s consumer or commercial, smart financial minds are going to try to make that money.”