San Diego, CA – In a bid to address growing allegations of sexual abuse among prominent organizations, law firms are increasingly seeking financial partners. This trend has accelerated as states expand the possibilities for victims to file historic sex abuse claims. The litigation often requires substantial investment, involving protracted legal battles against entities like the Boy Scouts, the Catholic Church, and federal institutions accused of overlooking abuse.
Law firms specializing in plaintiffs’ rights find themselves wrestling with the steep expenses that come with taking on massive institutions. High-profile settlements in recent years have demonstrated the size and scope of these suits. For example, the Catholic Archdiocese of Los Angeles settled claims last year for $880 million, and the Boy Scouts of America reached a $2.46 billion settlement in 2022.
Jessica Pride, a San Diego attorney who notably led a $116 million settlement with the Bureau of Prisons over sexual abuse claims at a facility in Dublin, California, underscores the financial strain: “You’ve got the cost of litigation along with depositions and other expenses. Having sufficient capital is critical to effectively advocate for our clients.”
To manage the financial load, firms are tapping into specialized funding sources such as banks, hedge funds, and litigation financiers. These backers usually focus on mass tort cases where the possibility of substantial payouts makes the investments appealing.
The financial arrangements can vary. Some law firms secure high-interest loans, using the potential proceeds from their cases as collateral. Others opt for revenue-sharing models, agreeing to give a portion of any settlement or award to their financial backers.
For instance, California’s Andrews & Thornton, which represents thousands in the Boy Scouts litigation, benefited from funding partnerships with Corbin Capital and Catalur Capital from 2020 to 2023. Similarly, Slater Slater & Schulman secured loans that financed their prosecution of sex abuse claims against religious institutions. The details, highlighted in loan documents, list sexual abuse claims in states including Arkansas and California as backing for their financial agreements.
Such financial engagements are not without their controversies. Jeff Anderson and Associates, a New York firm with a focus on sexual abuse claims, received outcry from an insurer of a Catholic diocese over the nature of its funding, which subsequently went to mediation.
To mitigate the upfront costs typical of litigation, some attorneys opt for lines of credit. Esquire Bank, known for lending exclusively to plaintiffs’ law firms, provides up to $30 million with interest rates around 9%, a service which Jessica Pride uses. She notes, “It’s relatively inexpensive funding which allows us greater flexibility in managing case costs.”
Critically, this financial strategy is not limited to firms dealing strictly with sexual abuse — even general practitioners like Texas attorney Tony Buzbee, who represents over 150 victims in claims against rapper Sean “Diddy” Combs, has accessed such credit facilities, though he specifies that his high-profile abuse cases do not use financed funds.
The dependency on funding is also a reflection of broader trends in litigation, with firms like Sanguinetti’s, handling cases as diverse as those against the Boy Scouts and public schools. She views her firm’s credit line as essential business funding, rather than direct litigation financing.
Yet, as cases grow in complexity and duration, financial pressures can mount, as Kayla Onder of St. Louis-based OnderLaw explains: “The longer these cases take to resolve, the more financial strain we experience. Diversification becomes vital to avoid drowning.”
Despite the challenging landscape, these partnerships between law firms and financiers highlight a persistent commitment to pursuing justice for victims of institutional sexual abuse, reflecting a pivotal shift in the legal battle against long-standing abuse.
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