Much of the debate over litigation finance is conducted in qualitative terms, access to justice on one side, distorted incentives on the other, but a smaller body of empirical scholarship has tried to actually measure the effect. David Abrams and Daniel Chen's "A Market for Justice: A First Empirical Look at Third-Party Litigation Funding," published in the University of Pennsylvania Journal of Business Law, was among the first efforts to test these claims against real data rather than theory, using Australian litigation records from a market where funding has operated openly and at scale for longer than in the United States.
Their central finding cuts in more than one direction at once: third-party funding does appear to correspond with an increase in litigation volume and court caseloads in the jurisdictions where it is most heavily used, which is precisely the access-to-justice effect funding's advocates predict, more meritorious claims get brought that otherwise would not have been economically viable. At the same time, the study is candid that the overall welfare effect of that increase is ambiguous: more litigation is not automatically a social good, and the paper stops well short of concluding that funding straightforwardly improves outcomes for claimants or the courts.
A larger and more directly relevant study has since added to the record. Ronen Avraham and Anthony J. Sebok's "An Empirical Investigation of Third Party Consumer Litigant Funding," published in the Cornell Law Review in 2019, draws on proprietary data covering more than 100,000 funding applications over twelve years from consumer litigation funders operating in the United States. The funder in the dataset rejected roughly half of all applications, and was consistently cautious about advancing too much capital against any single case relative to its expected value, a discipline the authors argue preserves the claimant's and the attorney's own incentive to pursue a good outcome. That finding is direct evidence against the common assertion that funders indiscriminately bankroll litigation regardless of merit, and it complicates the Abrams and Chen result rather than simply confirming it: selectivity at the individual case level and an aggregate increase in litigation volume across a market can both be true at once.
This is an area where the academic record is still thin relative to how large the industry has grown, and where this library expects to add more as new empirical work is published. For now, the honest summary is that funding is measurably selective at the individual case level, that claim has real data behind it now, while its aggregate effect on litigation volume in a given system remains a genuinely open empirical question, not settled in either direction.