Delaware’s federal court forced litigation funders into the open. Its most important court still lets them hide
A Delaware company can be hauled into the Court of Chancery today with no way of knowing who is paying for the lawsuit against it, whether that backer controls settlement, or whether it is a competitor or a foreign state amidst a surge in litigation backed by litigation finance firms.
- As we’ve written previously, the boards of companies moving out of Delaware most often cite the same concern: they can no longer predict how the state’s Chancery Court, once prized for its consistency and predictability, will treat them, amidst a series of decisions widely construed as judicial overreach.
- The legislature has tried to correct this problem through SB21, but certain Chancery judges continue to seemingly defy the will of the legislature, and the Delaware Supreme Court has inadvertently undermined their own efforts to overturn erroneous decisions by remanding cases back to the same judges.
- Real risks of undisclosed hidden litigation finance, including most alarmingly to national security The potential harms are concrete from undisclosed litigation finance firms underwriting litigation.
We warned in the pages of Fortune last week that the corporate flight from Delaware would only accelerate on the heels of Delaware Chancery Court Vice Chancellor Travis Laster’s controversial and widely criticized decision in the highly watched Cloudflare case.
- Undisclosed third-party litigation funding cuts against that promise in the one court that matters most to American business.
- Our courts function in the open, with public proceedings, published rules, and disclosure requirements designed to ensure that judges, litigants, and the public can understand who is driving a case—and why.
- A growing, mostly invisible market of litigation finance which has become perverted away from original noble intention The global litigation finance market was estimated at $20.6 billion in 2025, with forecasts that it will more than double over the next decade, and U.S.
- At its best, litigation funding expands access to justice for plaintiffs who could not otherwise afford to be heard, a noble founding intent as it was envisioned by the widely admired founders of the field.
- But as litigation finance firms have proliferated exponentially over recent years, the actual practice of litigation finance has frequently become perverted from those noble founding aims, with key challenges including that too often, it is opaque, undisclosed, and strategically deployed.
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