Here’s history in the making.
At one time, before many of us were born, plaintiffs had to bankroll their own lawsuits. There, they would pay the attorney for his time and counsel. The plaintiff bore the entire risk for the outcome. But, if he won, he kept the entire pile of money, minus his expenses paid to the attorney.
The next – and dominant – paradigm: contingency fees. There, the risk is transferred to the attorney. In exchange for accepting that risk, the attorney keeps a healthy portion of any settlement / judgment after expenses. That amount is generally 33 to 40%. Naturally, the plaintiff’s attorney must diligently assess the risk / benefit for each opportunity. If the attorney loses, the plaintiff does not go bankrupt.
Enter the modern age.
Third party financing of lawsuits, as reported in the NY Times on November 15th: