The rise in litigation funding brings a predictable follow-on question: Are litigation funding agreements protected as work product, or instead, are such agreements discoverable? This case provided an opportunity for the Court of Chancery to weigh in on that question in the context of class action litigation.
In advance of a motion for class certification, the defendants requested production of the plaintiffs’ litigation funding agreement to ensure there were no conflicts of interest between the funders and the putative class members. The plaintiffs refused, arguing that the agreement was irrelevant and protected by the work product doctrine.
After a reviewing precedent and current literature on the topic, and after an in camera review of the agreement, the Court concluded that the agreement was discoverable for two reasons: the class action context and the funding agreement itself. First, the funding agreement was relevant to class certification because the certification process required inquiry into whether there were any diverging interests with the funder that might impact the ability and willingness of the class representative or class counsel to represent the class. Second, in this instance, the funding agreement expressly acknowledged an “expectation” that the agreement would be disclosed during the class certification process. Against these two reasons, the Court found the plaintiffs’ brief argument for work product protection did not meet their burden. Accordingly, the Court ordered that the agreement be produced.
