Legal advertising & third-party litigation funding fuel rise in insurance costs: Triple-I

A new brief by the Insurance Information Institute (Triple-I) suggests that a sharp rise in attorney advertising, mass torts and third-party litigation funding (TPLF) in the United States is linked to the rising insurance costs.

According to research from the American Tort Reform Association (ATRA), legal service providers spent more than $2.5 billion on 26.9 million ads in 2024 alone, with significant increases in television, radio and outdoor advertising since 2017.

TV ads peaked in 2023 with 16.4 million placements – a 44% increase from 2017. Radio ads surged to over 6.8 million in 2024 – a 261% jump from 2017 levels. Outdoor advertising, including billboards, rose by over 260%.

Advertising spending has gone up 39% since 2020, partly due to higher digital costs. However industry experts warn that the growing saturation of legal advertisements, often financed by third-party litigation funders, could be fuelling legal system abuse, driving up insurance claims and causing delays in settlements.

“Attorney advertising has become big business in the U.S., fuelling explosive growth in the likes of multi-district litigation, which solicit anyone and everyone to join frivolous and expensive cases around anything from ear plugs to weed killer,” said Sean Kevelighan, CEO, Triple-I. “These ads, often bankrolled by litigation funders, create urgency and overpromise outcomes, drawing in claimants who might not have otherwise considered legal action.”

The Legal System Abuse and Attorney Advertising for Mass Litigation: State of the Risk report outlines several dangers of attorney advertising. Firstly, it can generate a misleading sense of urgency, pushing individuals into hasty legal decisions without exploring alternatives.

Secondly, it often overstates potential outcomes by suggesting guaranteed large settlements, which fosters unrealistic expectations and might affect the timeline for reaching a resolution.

Lastly, it can influence potential jurors by disseminating information skewed in favour of the plaintiff, potentially influencing how they interpret case facts.

“TPLF, in which dark money investors finance lawsuits in exchange for a portion of the settlement or judgment, has become a major force behind the surge in mass litigation. The infusion of capital allows law firms to scale up legal efforts, including expensive and widespread plaintiff recruitment through advertising,” analysts explain.

Funders are drawn to TPLF due to its economic potential of multidistrict litigation (MDL), combined with the high upfront costs of pursuing them, the report noted.

TPLF assets under management reached $16 billion, with approximately 74% of commitments allocated to legal budgets – expenditures that can include advertising for plaintiff acquisition and case aggregation, according to the 2024 Westfleet Insider report.

Additionally, research by Yehonatan Givati and Eric Helland indicates a direct relationship between the amount of advertising and the number of plaintiffs involved in MDL cases.

This research, Triple-I report highlighted, supports the idea that attorney advertising, frequently supported by TPLF, contributes to the increase in litigation.

Givati and Helland suggest that the rise in case filings reflects an actual increase in claimants, rather than just competition among lawyers for existing cases.

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

Attorney advertising and third-party litigation funding is driving the reshaping of the legal landscape, which has prompted stakeholders to urge policymakers to balance access to justice by preserving the integrity of the legal system.

The report underlined that “without greater transparency and oversight, the combined impact of mass tort advertising and external funding could further strain insurers, raise premiums, and erode public trust in the civil justice system.”

“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 concluded.

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