Earlier in March, the Washington, D.C. Office of the Attorney General announced it is seeking outside counsel for a climate change investigation – and would allow attorneys to engage in third party litigation funding in the process.

D.C. Attorney General Karl Racine tweeted on March 15 a solicitation for outside legal counsel for climate change litigation, specifically an investigation into ExxonMobil for potential violations of D.C.’s Consumer Protection Procedures Act. (Note that D.C. already has a full-time lawyer working on climate change, hired through a grant program funded by Bloomberg Philanthropies and the New York University School of Law’s State Energy and Environmental Impact Center.) Lawyers hired for this climate change project would work on contingency fee arrangements for up to $25 million. Additionally, the contract includes provisions allowing for attorneys to engage in third party litigation funding to pay for up-front litigation costs. If the attorneys prevail in litigation, third party investors would receive a portion of D.C.’s award.

This type of third party litigation financing allowed by the D.C. solicitation leads to questionable claims, prolonged settlements, and the skirting of ethics rules as investors unrelated to the underlying issues of the case seek to maximize monetary awards. Third party litigation financing disadvantages defendants unaware their opposition is being funded by an unnamed third party and plaintiffs who lose control over decision making in their own litigation. Furthermore, in this case where the D.C. government is the plaintiff, third party involvement would reduce the amount of any awards dedicated to programs benefitting taxpayers.

Wisconsin led the nation on litigation funding transparency by passing 2017 Act 235 last session. The legislation provided that that, unless stipulated or ordered by the court, a party shall provide to the other parties any agreement under which any person, other than an attorney permitted to charge a contingent fee for representing a party, has a right to receive compensation that is contingent on and sourced from any proceeds of the civil action, by settlement, judgement, or otherwise. Read more about Act 235 here.

Meanwhile, the U.S. Chamber Institute for Legal Reform (ILR) is calling for third party litigation funding transparency at the federal level. ILR also recently issued reports detailing concerns about the growth of public nuisance lawsuits seeking to hold individual businesses accountable for the global issue of climate change, similar to the D.C. investigation.