Consumer legal funding, non-recourse cash advances to individual plaintiffs, often to cover living expenses while a mass tort or MDL claim is pending, is the fastest-growing segment of a billion-dollar funding industry, and also its most criticized. Unlike commercial litigation finance, which funds sophisticated corporate claimants through experienced counsel, consumer legal funding markets directly to individuals, frequently through the same advertising and call-center infrastructure used to generate mass tort dockets in the first place.
Critics, including plaintiffs' lawyers, policymakers, and tort-reform advocates alike, point to several recurring concerns: effective interest rates that can run far above conventional consumer credit; claims where a meaningful share of plaintiffs never actually used the product at issue or lack the alleged injury; the possibility that funders' interest in a quick settlement conflicts with an individual claimant's own interests; and a structural worry that outside capital used for attorney advertising can help generate litigation independent of underlying case merit.
Because of these concerns, consumer legal funding is now regulated more directly than commercial litigation finance in several states. New York's Consumer Litigation Funding Act, effective June 17, 2026, caps recoveries to funders at 25% of the gross recovery in the underlying case, a level of direct rate regulation that has no equivalent yet in commercial litigation finance.