The issue of third-party litigation funding has taken center stage in the federal defamation case filed against CNN by legal scholar Alan Dershowitz, with CNN’s attorneys arguing that the funders of Dershowitz’s lawsuit are bent on “silencing” the cable news channel.
The defamation suit was filed in the Southern District of Florida late last year. Dershowitz’s attorneys allege that CNN presented a “false narrative” of what Dershowitz said during the 2020 impeachment trial of former President Donald Trump. CNN’s coverage falsely portrayed Dershowitz as saying Trump could engage in illegal acts and still be immune from impeachment, the complaint says.
CNN’s recent court filings point to what defense attorneys say are inconsistent statements Dershowitz’s attorneys have made regarding the funding of the defamation lawsuit through the “Alan Dershowitz Legal Defense Trust.” Plaintiffs initially said they would disclose contributors to the fund but later declined, according to a motion filed by CNN’s attorneys.
“... If (the) plaintiff has funders who are involved in the litigation, either by directing his legal strategy or supporting the litigation as a way to silence CNN, this casts doubt on the notion (the) plaintiff brought this case in order to remedy an actual personal harm,” the motion states.
The plaintiff side’s shifting position on litigation funding disclosures have a bearing on the plaintiff’s credibility and could help the defense to blunt any “David vs. Goliath narrative” during a trial, according to the Oct. 24 motion filed by CNN.
Litigation funding has been a concern in many states, including Florida, where supporters of civil litigation reform say third-party litigation funders should be disclosed as a matter of transparency. Such funders may have solely financial motives – that is, getting a healthy return on their investment – but they may have political motives or other interests in outcomes, observers say.
“As litigation funding itself is becoming more prominent, defense counsels in all types of cases are certainly moving toward the disclosure of that information,” Toyja Kelley, a partner at Locke Lord LLP in Washington, D.C. and president of the DRI Center for Law and Public Policy, told the Florida Record. “The litigation funding industry as a whole is in the billions of dollars now.”
More and more states are enacting policies to make the mechanism of third-party litigation financing more transparent, Kelley said.
““Over time you're going to see more and more states adopt rules that require disclosure of some information relating to third-party funding,” he said. “... I think the pendulum is certainly swinging toward disclosure.”
In the defamation case, a third-party funder might simply be interested in a return on investment, since CNN has deep pockets, or such a funder could have political motivations, according to Kelley.
“In some litigation-funding agreements, the litigation funder is something more than a passive investor,” he said.
Chicago-based DRI advocates for more transparency in financial transactions that involve civil litigation funding.
Neither CNN nor Dershowitz’s attorney responded to requests for comment.