Is Third-Party Funding for Plaintiffs Ethical?

I came across this article at Findlaw.com -- written by Professor Anthony J. Sebok -- concerning a recent New York Supreme Court case in which the plaintiff had received money from a non-party company that invested in the probability of the plaintiff recovering on his Labor Law sec. 240(1) claim.  Professor Sebok raises numerous cogent points on the peculiar interest Justice Warshawsky had concerning the arrangement between the plaintiff and the non-party Lawcash -- especially the large return on the company's investment within one year's time (2 -4 % compounded monthly).  However, I still have a visceral reaction to a non-party loaning money to a party in an action, thereby frustrating any chance of settlement.

My first reaction was to scream champerty, but Professor Sebok clarified that point; nevertheless, I'm still troubled about the possibility that a non-party can somehow fund a party to continue an action he or she might otherwise be unable to pursue. 

Comments

[Kevin]

What about Maintenance?

[Bill Altreuter]

I agree it sounds sleazy, and, of course, it would be if the lender was also the plaintiff's attorney, or was in someway linked to the attorney. My objection, however, is that the plaintiff gets hosed on these deals, just as they do when they cash out structured settlements. Nothing illegal about either, but from a consumer protection standpoint I think both are unfair. Markets have their place, but sometimes other considerations should prevail.

[Matt]

I have a visceral reaction to both sides whom are exposed to the problems with this arrangement -- plaintiff and defendants. I agree that this part of the legal sector needs some consumer protection and regulation.