Qui tam suits under the federal False Claims Act let private whistleblowers ("relators") sue on behalf of the government and share in any recovery, typically 15-25% of the government's recovery if the DOJ intervenes in the case, or 25-30% if the relator pursues it alone after the government declines. Because these cases can take years and relators bear significant personal and financial risk, a small but growing segment of litigation funders now finance qui tam claims, purchasing a share of the eventual relator's award in exchange for upfront capital.
This corner of the industry draws particular scrutiny because the relator is litigating on behalf of the government's own interests, not merely their own, which raises a sharper version of the usual independence concerns. The Department of Justice has responded by requiring qui tam relators to disclose to it any agreements with third-party litigation funders, giving the government visibility into funding arrangements that could otherwise be entirely private.
Critics of funded qui tam litigation argue that outside capital could incentivize marginal claims or give funders indirect influence over prosecutorial-adjacent decisions; supporters counter that funding simply allows relators with legitimate claims, but without the resources to withstand years of litigation against well-resourced defendants, to actually bring cases forward, a version of the same access-to-justice argument made throughout commercial litigation finance.