Third-party litigation funding fuels surge in legal advertisements – Triple-I

The Insurance Information Institute (Triple-I) released a new issues brief analyzing the rise in attorney advertising and the role of third-party litigation funding (TPLF) in shaping legal trends and insurance dynamics.

The report highlights how these factors are contributing to increased litigation and influencing settlement timelines.

Citing data from the American Tort Reform Association (ATRA), Triple-I noted that legal service providers spent more than $2.5 billion on 26.9 million advertisements in 2024. The data showed significant increases across television, radio, and outdoor formats since 2017.

Television advertising peaked in 2023 with 16.4 million ads, a 44% rise from 2017 levels. Radio advertising expanded to over 6.8 million ads in 2024, reflecting a 261% increase, while outdoor advertising, including billboards, similarly rose by more than 260%.

A previous ATRA report concerning the advertising landscape shows that spending is concentrated in key media markets. In 2024, major cities such as Los Angeles, New York, Atlanta, Orlando, Miami, Dallas, Tampa, Phoenix, Houston, and Las Vegas accounted for the highest volumes of legal service advertisements.

This geographic concentration suggests a targeted strategy by law firms and litigation funders to reach areas with higher population densities and potential plaintiff pools.

Triple-I said that part of the growth in advertising spending, which has climbed 39% since 2020, is tied to rising digital costs. However, it also pointed to the involvement of third-party litigation funders, suggesting that the saturation of legal advertisements may be contributing to higher insurance claims and prolonged settlement periods.

Legal advertising expenditures by trial lawyers also outpaced other industries. In 2024, trial lawyers’ $2.5 billion in spending on nearly 27 million legal ads exceeded the $1.1 billion spent by pizza chains on 4.1 million ads nationwide.

Sean Kevelighan (pictured above), CEO of Triple-I, said attorney advertising has evolved into a large business that fuels the growth of multi-district litigation, drawing in individuals for cases ranging from earplugs to weed killers.

“These ads, often bankrolled by litigation funders, create urgency and overpromise outcomes, drawing in claimants who might not have otherwise considered legal action,” Kevelighan said.

Attorney advertising risks

Triple-I’s brief outlined several risks linked to attorney advertising, noting that it can create a sense of urgency among audiences, potentially leading to hasty legal actions without full consideration of alternatives.

The brief also indicated that such advertisements might foster unrealistic expectations of guaranteed settlements and could influence juror perceptions by presenting biased information before a case is heard.

TPLF, where investors finance lawsuits in return for a portion of any settlement or judgment, has become a significant element of the legal environment. The availability of external capital has enabled law firms to expand plaintiff recruitment efforts through increased advertising campaigns.

The 2024 Westfleet Insider report noted changes in the litigation funding sector. Although the TPLF market contracted by nearly 30% from 2022 levels, the average litigation finance deal size grew to $8 million in 2024, up from $7.8 million in 2023. This increase in deal size reflects a trend toward larger and potentially more complex cases, requiring significant financial backing for law firms to manage high costs associated with mass litigation.

The same report estimated that assets under management in the TPLF sector reached $16 billion, with approximately 74% of commitments directed toward legal budgets. These budgets often include marketing expenditures for client acquisition and case aggregation.

Research from Yehonatan Givati and Eric Helland, referenced by Triple-I, indicates a direct relationship between the volume of advertisements and the number of plaintiffs participating in multi-district litigation cases. The findings suggest that growth in litigation is not solely driven by competition among law firms but also by an actual rise in claimants.

“Third-party litigation funding adds fuel to the big business of law fire,” Kevelighan said. “By enabling broader reach and sustained legal action, TPLF may amplify systemic challenges, particularly in how insurers model risk and calculate premiums.”

Stakeholders have called for more transparency and regulation in response to the changes in the legal system. They argue that balancing access to legal recourse with maintaining the integrity of the civil justice system is necessary. Without additional oversight, the combined effects of increased advertising and external funding could put further pressure on insurers, lead to higher premiums, and affect consumer trust.

“Tripe-I continues to shine a light on legal system abuse, calling for more tort reform to wrangle in what’s become out-of-control tactics by billboard attorneys who are exploiting Americans and increasing costs for critical household products and services,” Kevelighan said.