As mass tort litigation continues to keep the profession and the judicial system exciting with its high-risk, high-reward model, a controversial new trend is propelling the field into a multi-billion-dollar industry, and uncharted territory.
The rapidly evolving litigation-funding sector is increasingly investing in mass torts with the potential for substantial settlements. The U.S. government has also raised red flags about the threat of foreign and hostile entities surreptitiously influencing and manipulating the judicial system.
In 2023, litigation financiers invested close to $17 billion in high-profile lawsuits such as those involving Camp Lejeune and the 3M earplug disputes.
The Camp Lejeune lawsuit is shaping up to be one of the largest ever. The government estimates it could pay out as much as $21 billion.
Lives and public health are frequently at stake in mass torts like these cases, and firms typically need to prepare for years with limited manpower and resources on contingency as they prepare for trial.
Tort resolutions can stop and punish malicious behavior, create new or improved policy and guidance, and protect consumers. And of course, a favorable result—which can be in the billion-dollar range—will compensate victims, as well as their lawyers, who often collect between 30% to 40% of the final award amount.
With the increasing involvement of litigation finance in mass torts and other emerging trends, the legal industry faces significant challenges as it grapples with the evolving ethical dilemmas inherent in a multi-billion-dollar industry that impacts thousands of lives.
Unlocking Insights
In the complex world of civil actions, mass torts stand out as a significant avenue for seeking justice. Each year, thousands of these cases flood federal or state courts, uniting individuals with allegations against the same defendant for wrongful acts that caused injury.
Between 2020 and 2022, 6,329 mass torts were filed in the top three districts of the U.S.—the Southern District of Texas, the District of New Jersey and the Southern District of Florida. That’s nearly six cases every day, highlighting the pressing nature of these claims.
Unlike class actions, victims in mass torts are treated as individuals, with their settlements determined on a case-by-case basis. Mass torts often arise from catastrophic events like toxic dumping, environmental disasters, and large-scale injuries caused by defective drugs, such as the ban on popular weight-loss and performance-enhancing supplement ephedra.
The safety of ephedra came under scrutiny in 2003 after the tragic death of Baltimore Orioles pitcher Steve Bechler, whose use of the supplement was linked to his heatstroke. This incident set the stage for significant legal battles.
James P. Frantz, the founder of Frantz Law Group APLC, took on Bechler’s case, spearheading the first federal class action against the product’s manufacturers. His efforts revealed a troubling link between ephedra and serious health risks like heart attacks and strokes, resulting in an $18.5 million award at trial, which, despite being reduced and appealed, marked a pivotal moment for the firm and its mass tort practices.
Each year, thousands of these cases flood federal or state courts, uniting individuals with allegations against the same defendant."
Frantz’s journey didn’t stop there. He successfully represented hundreds of clients affected by strokes and heart attacks linked to ephedra, securing millions in settlements.
“When we achieved that verdict and the tort results, that’s when I realized mass torts could be pretty good for people because they had a way to get restitution,” said Frantz, whose firm is ranked Tier 1 in San Diego by Best Law Firms® since 2010 for Mass Tort Litigation / Class Actions – Plaintiffs, and for Personal Injury Litigation – Plaintiffs.
“Clients don't have to pay a humongous cost to litigate the case, since it's spread out for the experts across the whole field. And obviously there is a benefit to have a uniformity in decisions when you have one judge presiding on all issues in the tort.”
Frantz’s advocacy extended beyond the courtroom. Frantz was called to testify before Congress in 2004, where he shared critical insights from the trial. His testimony, along with that of other experts, highlighted the dangers of ephedrine alkaloids, leading to a crucial decision by the FDA just a few months later in May of that year to permanently ban ephedra-based dietary supplements.
In Colorado, Burg Simpson Eldredge Hersh & Jardine, PC has made its mark in mass tort litigation, successfully resolving dangerous drug cases such as those involving Fen-Phen, Yaz/Yasmin, Ortho Evra and Pradaxa. Co-founder Michael S. Burg has a reputation for a selective approach to accepting cases, stemming from the immense resources required to pursue mass torts.
“We’ve passed on cases that maybe had huge monetary potential, but we were not willing to make those years-long commitments,” said Burg, who has been recognized by Best Lawyers of America annually since 2007 and named Best Lawyers® “Lawyer of the Year” in 2018 and 2013 for Mass Tort Litigation/Class Actions – Plaintiffs in Denver.
“While there are more mass tort litigations today than ever, there are also a number that have been thrown out by the judge. This can lead to your firm losing millions of dollars and you better have the financial wherewithal to deal with that.”
In a world where the quest for justice is fraught with challenges, mass torts offer a pathway for individuals seeking restitution. As these cases gain momentum, the stories behind them continue to unfold, revealing the resilience of those fighting for their rights against powerful industries, and raising new questions about mass torts that require thoughtful consideration.
Strategizing on Non-Lawyer Funding and Influence in Torts
While chasing damage awards may not be the top priority, the business of law continues to be costly, and some firms and lawyers have sought outside assistance to fund their litigation. This can jeopardize the integrity of a claim.
One of the biggest risks in mass torts has been the rise in third-party litigation funding (TPLF), Frantz and Burg noted, which allows hedge funds and other financiers to invest in lawsuits in exchange for a percentage of any settlement or judgment.
According to a 2024 report from litigation finance advisory firm, Westfleet Advisors, TPLF evolved into a multibillion-dollar worldwide industry, with an estimated $15.2 billion in commercial litigation investments in the U.S. alone.
The U.S. Chamber of Commerce has expressed its discontent with the increase in TPLF and its influence on the country’s judicial system.
“Allowing outsiders to secretly use courtrooms as a trading floor incentivizes the filing of non-meritorious litigation,” the Chamber noted in June 2024 via the Institute for Legal Reform (ILR).
“Litigation is extremely expensive, and businesses seek to avoid it. Businesses often settle cases rather than engage in protracted and costly litigation, regardless of whether the claims are legitimate. Since TPLF lets plaintiffs off the hook for legal costs, there is little risk for them to advance non-meritorious claims.”
The ILR noted that the American Bar Association’s Model Rules of Professional Conduct Rule 5.4, which safeguards lawyer independence by prohibiting nonlawyers from owning law firms or splitting fees with attorneys, is under attack. Though funders cannot dictate what happens during the case, Burg said, third parties make money by charging high interest rates.
“A lot of firms do use third-party funding,” Burg said. “[Those who do] are between a rock and a hard place because you have the obligation for your clients, when and if the case settles, to pay the funder a significant amount of money based on the interest that they’re charging.”
Third-party litigation funding evolved into a multibillion-dollar worldwide industry, with an estimated $15.2 billion in commercial litigation investments in the U.S. alone."
“And you better make sure your client understands that. We don't use outside funding sources and have a great bank relationship. If you're going to do a mass tort, you need to have a significant line of credit.”
But the concept of entrepreneurs and hedge funds investing in tort litigation is just one cause for alarm. Lawmakers see the risks in this poorly regulated area and have called for protections to guard against foreign and hostile entities covertly influencing and manipulating the U.S. judicial system.
Recognizing the urgency, a bipartisan group of lawmakers recently took significant steps to address these concerns. In September 2023, Senators John Kennedy (R-LA) and Joe Manchin (D-WV), along with Representative Mike Johnson (R-LA), introduced S.2805, the Protecting Our Courts from Foreign Manipulation Act of 2023.
The bipartisan bill aims to prevent foreign governments and entities from funding litigation in U.S. courts, thus jeopardizing national security and impacting the national economy. S.2805 would require disclosures from any foreign person or entity involved in TPLF in U.S. federal courts, prohibit foreign governments and sovereign wealth funds from participating in litigation finance, and mandate reports from the Department of Justice on foreign TPLF activities.
The bill was read twice and referred to the Committee on the Judiciary, and had the ILR’s public support, but has not progressed since September 2023.
With so many high-profile and presumably high-value torts affecting the country—from the Camp Lejeune action to the 3M earplug suits which combined will potentially impact thousands of plaintiffs—lawyers considering accepting similar cases should know how to strategize and spot the trends driving the practice area.
Navigating Legal Fees and Maintaining Focus
Similar to common injury law practice, tort litigation relies on a contingency fee model. Frantz and Burg both noted that their fee reflects the general market percentage rate of about one-third of the final award amount.
Though that initially seems like a substantial payday, both lawyers said their firms commit years of effort and resources to hire experts, discovery, preparation, strategy and client communication in the face of inevitable delays.
Frantz and Burg emphasized the honor of being selected by a judge to either lead or contribute to steering committees. This role has been pivotal in guiding the course of specific claims and has facilitated their navigation through the complex maze of work assignments, client interactions, expert consultations and the allocation of payments.
Frantz served on the Plaintiffs’ Steering Committee for the Porter Ranch Gas Leak litigation, a tort filed against SoCalGas in 2015 and had nearly 8,200 plaintiffs. The case settled in 2021 for $1.8 billion, one of the largest mass tort litigations in U.S. history. The firm is also on the steering committees in a social media litigation in Los Angeles County and an action against a public utility in Hawaii as a result of the wildfires that ravaged Maui in 2023.
“The steering committee is a great resource, because those lawyers are often the best in the country, and then they kind of coordinate all the work that has to be done,” Frantz said. “It’s like having one major law firm. I think it's hard for the defendants to keep up with that.”
When a judge appoints a lawyer or firm to a steering committee, it enhances reputation and demonstrates a firm’s leadership capabilities to peers, the public and other judges who preside over torts and class actions.
Burg has participated in several steering committees over the years. In 2023, he pointed out an important development: Judge Pearson appointed Burg Simpson Shareholder Seth A. Katz as Co-Lead and Interim Class Counsel for a class action against Norfolk Southern Railway Company, stemming from a train derailment in East Palestine, Ohio, earlier that year. The incident caused significant environmental damage and forced over 2,000 residents to evacuate or relocate. The April settlement amounted to $600 million.
“You quickly learn that the defense counsel you are up against are the best in the world,” Burg said. “They're not afraid to spend a billion in legal fees fighting you. And you better have a big enough war chest, which is why you have the plaintiff steering committee, where each firm on that committee puts up anywhere between $200,000 to over $1 million just to fund the litigation. That money is gone until—and when, and if—the case resolves. You get that money back, but nothing additional. That's just part of the cost of being able to move ahead in the litigation.”
Environmental Claims Setting a Broad Path for Torts
Though the future of mass torts will still heavily rely on defective drugs and products, Frantz noted that climate risk is a big driver of his cases. Torts rooted in wildfire litigation often reveal that inadequate preparedness frequently puts public utilities in the liability hot seat for mismanagement.
In 2019, Frantz Law Group secured $13.5 billion from Pacific Gas & Electric (PG&E) on behalf of thousands of victims harmed by PG&E’s negligent maintenance and inspection of its utility equipment in the 2017/2018 Northern California wildfires (FLG represented more than 4,400 fire victims). The firm also represents thousands of victims in actions against PG&E, Southern California Edison, Liberty Utilities and the Los Angeles Department of Water and Power for losses arising from 10 more wildfires.
Wildfire litigation is not relegated just to California. On Aug. 8, 2023, a series of wildfires erupted in Lahaina, Olinda and Kula, Hawaii, with the Lahaina fire burning 2,170 acres before it was finally contained in early September. Investigations indicate a downed Hawaiian Electric power line may be the cause. With 115 confirmed casualties, the Maui wildfire became the fifth-deadliest wildfire in U.S. history.
Frantz Law Group opened its Honolulu, Hawaii, office in 2021 as part of a strategic expansion, and partnered with another local law firm to provide aid to clients. The combined loss of life, pain and suffering, displacement and property damage and other factors are projected to cost more than $6 billion.
“Environmental claims are driving our practice right now,” Frantz said. “There are landfill-related actions we’ve taken up in addition to the fires. We have a lot of dry areas in California and a lot of bad actors in the public utilities that aren't doing their jobs correctly. It’s our position they are causing or contributing to the fires and leaks.”
Words of Wisdom and Caution for Tort Litigation
Burg, who also serves as an adjunct professor at The University of Denver Sturm College of Law, where he teaches mass tort law, emphasizes that lawyers and firms should consider three key factors before deciding to pursue a tort.
First, they must understand the nature and scope of the case. Second, they need to determine whether the case aligns with their individual or firmwide mission. Finally, they should evaluate the role they will play—whether as lead counsel, co-counsel, or merely a gatherer.
“There used to be a lot more firms that would refer the cases to firms like ours and others that have a wealth of experience in this area,” said Burg, who has held the teaching post since 1995. “Today, most firms just gather the case and then wait for us or the other leaders to bring the case home, right pay their assessment, and they make their money that way.”
Frantz offered similar advice for those new to tort law, emphasizing the importance of "looking carefully at the science" to ensure the case has merit. He also advised assessing the opposition.
“Sometimes you go up against the best defense counsel in the world,” Frantz said. “But still, look at the strength of the defendant. Because if they are not strong and go bankrupt and don’t have assets, you’re out of luck when trying to settle.”
Justin Smulison is a professional writer who proudly contributes to Best Lawyers. Credits include reporting for the New York Law Journal and leading production for ALM's Custom Projects Group. In addition to writing, he has developed global audiences by hosting and producing podcasts and video interviews for professional organizations and music sites. JustinSmulison.contently.com
