The August 19, 2026 New York Times article, “How Wall St. Profits When Personal Injury Lawsuits Pay Out,” takes a hard look at the rapidly expanding world of litigation financing.
Litigation financing can give an injured person short-term help with rent and other expenses while a personal injury claim is pending. But the same arrangement can turn the lawsuit into an investment product, with steep fees and incentives that do not necessarily track the fair value of the claim.
According to the Times, plaintiffs who receive litigation advances commonly repay the advance, together with fees and interest averaging 35% to 45% per year.
The investigation also raises a harder concern: what incentives do these arrangements create? The Times reviewed lawsuits and interviewed more than 50 lawyers, paralegals, and current and former employees of consumer litigation-funding companies. A dozen former law-firm and funding employees reportedly described funders or lawyers offering the prospect of additional advances if plaintiffs underwent additional surgeries. Those procedures could increase the claimed value of the personal injury case.
That bears little resemblance to helping an injured person cover living expenses while a legitimate claim moves through the courts.
Wisconsin Requires Disclosure
Wisconsin addressed the issue early.
In 2018, Wisconsin became the first state to require mandatory disclosure of certain third-party litigation-funding agreements. See Mark Behrens, Third-Party Litigation Funding: A Call for Disclosure and Other Reforms to Address the Stealthy Financial Product That Is Transforming the Civil Justice System, 34 Cornell J.L. & Pub. Pol’y 1, 28 (2024).
Wis. Stat. § 804.01(2)(bg) provides:
“[A] party shall, without awaiting a discovery request, provide to the other parties any agreement under which any person, other than an attorney permitted to charge a contingent fee representing a party, has a right to receive compensation that is contingent on and sourced from any proceeds of the civil action, by settlement, judgment, or otherwise.”
The disclosure requirement has direct consequences for subrogation practice.
Litigation financing generally involves a third party providing funds to a litigant in exchange for an interest in the eventual proceeds of the claim. That arrangement can introduce another stakeholder competing for a limited settlement fund.
When available insurance, assets, or other sources of recovery are insufficient to satisfy everyone with an interest in the proceeds, the existence of a litigation funder can materially affect settlement negotiations and the practical recovery available to a subrogated carrier or health plan.
Our own case files present a puzzle.
We have tracked Wisconsin’s disclosure requirement for more than a year and handled hundreds of matters during that time. We have not received a single disclosure of a litigation-financing agreement.
Perhaps litigation financing was not involved in those cases. It may be more common in other jurisdictions or in different segments of the plaintiffs’ bar. The other explanation is more concerning: the statutory disclosure requirement may not be reflected in day-to-day practice.
For subrogation practitioners, the practical questions are concrete. Are funding agreements appearing in these matters? Are the agreements being disclosed? When a funder has an interest in the proceeds, does that change settlement negotiations or reduce the amount available to satisfy a client’s subrogation interest?
Answers will depend on what practitioners are seeing in actual files. Experience across jurisdictions and different parts of the plaintiffs’ bar should show whether these agreements remain uncommon in subrogation cases or whether disclosure is simply not happening as the statute contemplates.
