Last week we participated in a panel addressing judicial scrutiny and transparency in class action settlements. While our regular drug and device litigation is typically mass torts rather than class actions, a couple of the topics seemed blogworthy.

One of our fellow panelists was a federal judge with a growing reputation for casting sunshine on third-party litigation funding (“TPLF”) and private equity’s involvement in class actions and mass torts. We’ve blogged repeatedly about TPLF (for example, here, here, and here), and the effort for adoption of a uniform federal rule requiring TPLF disclosure continues (most recently, 214 companies submitted a joint letter to the Advisory Committee requesting the adoption of a uniform Federal Rule of Civil Procedure requiring the disclosure of third-party litigation funding agreements – the press release from LCJ is here).

But the involvement of private equity and investment in our country’s litigation system goes much deeper than traditional TPLF.  One example is the current MDL involving claims against banks and settlement administrators alleging that certain settlement administrators (some of which are owned or controlled by private equity) worked with settlement banks to receive millions of dollars in undisclosed amounts. Essentially, kickbacks. See Consolidated Class Action Complaint, In re Class Action Settlement Administration Litigation, MDL No. 3162 (D.D.C. May 18, 2026), ECF No. 123. The allegations in that MDL were a significant topic of discussion by the panel, and that spun off some tangential discussion about the impacts of Arizona’s Alternative Business Structure (“ABS”) rule. If you’re not familiar with the ABS model, it permits non-lawyer ownership of law firms and generated a rush by mass tort firms to establish firms in which private equity interests could own a stake in a law firm. A good summary of some of the problems associated with ABS is here, and the directory of entities registered as ABSs in Arizona is here. Indeed, even a publicly traded Australian plaintiff’s class action firm (Shine) registered to do business in the United States as an ABS. The American Bar Association’s Model Rule 5.4—which prohibits attorneys from providing services through a professional corporation or association in which a nonlawyer either owns an interest or has a right to control the lawyer’s professional judgment—precluded non-lawyer ownership of law firms. But the ABS structure in Arizona, which ostensibly was intended to improve access to justice in the state, explicitly removes that prohibition and opens the gates to non-lawyer ownership.