Let the Big Law AI arms race begin. Kirkland & Ellis, America’s largest and most profitable law firm, announced last week that it’s investing $500 million to build its own artificial intelligence platform. Kirkland’s bet is that proprietary AI will give it an edge over rivals stuck with off-the-shelf tools such as Harvey and Legora. Expect a handful of Kirkland’s wealthy peers to make similar bets. But for most US law firms, the AI race is a contest they won’t win because it’s a contest they’re effectively prohibited from entering. Law firms can’t raise outside capital the way other businesses do. Legal ethics rules—specifically Rule 5.4 of the Model Rules of Professional Conduct—ban firms from raising equity financing or sharing fees with non-lawyers. Those rules explain why not a single law firm, not even Kirkland & Ellis with its $10 billion in annual revenue, is publicly traded on any stock exchange. No surprise, then, that Kirkland said it would fund its AI platform from its own revenues rather than through a third-party investment. Rule 5.4 cuts law firms off from the capital markets. In nearly every other industry, robust capital markets allow small upstarts to vie with large-scale incumbents, producing healthy competition that lowers prices and improves quality. While Rule 5.4 hurts all law firms, it gives a comparative advantage to larger, wealthier law firms like Kirkland that can self-finance long-term investments. And it gives a courtroom advantage to the larger, wealthier businesses that can afford those law firms’ rates. The stakes are about nothing less than access to justice: who gets legal representation, and who is left standing outside the courthouse gates. Our civil justice system has long been plagued by an affordability and access crisis. According to New York University Law School, as many as 90% of Americans show up to state court without a lawyer. Even those individuals and small businesses who can afford a lawyer are often outmatched by better-resourced litigation opponents. The promise of “Equal Justice Under Law,” emblazoned across the façade of the US Supreme Court, is out of reach for too many. Promising market solutions have recently emerged. The capital restrictions that prevent firms from matching Kirkland’s bet are the same ones these emerging reforms are designed to dismantle. The Arizona Supreme Court in 2020 eliminated its version of Rule 5.4 allowing for alternative business structures, or ABS, where law firms can accept equity investment from non-lawyers. The court explained that the program was “rooted in the idea that entrepreneurial lawyers and nonlawyers would pilot a range of different business forms” to improve access to justice. Stanford researchers concluded in 2025 that individual consumers and small businesses are the prime beneficiaries of an ABS framework. ABS structures would allow firms to obtain third-party capital to invest in AI and other projects. A second innovation is the managed services organization, or MSO, which permits law firms to subcontract non-legal services and receive cash investments in ways that are consistent with Rule 5.4. Some firms, including McDermott Will & Emery, are exploring partnerships with MSOs to obtain third-party capital infusions they can deploy toward AI and other long-term investments. Certain MSOs, like ours at Certum Group, maintain full-stack development teams that are already building proprietary AI and other technological tools, providing smaller firms with cutting-edge capabilities that were traditionally available only to the largest firms. And then there is third-party litigation finance, where outside investors fund the fees and costs of litigation in exchange for a share of any recovery. Third-party funding enables plaintiffs and their lawyers to prosecute meritorious cases regardless of their resources. Funders also can provide non-recourse working capital to claimholders, allowing them to better compete not just in the courthouse but in the marketplace, as Suneal Bedi of Indiana University and I recently argued in the Southern California Law Review. Each of these innovations rests on the same premise: Market forces can bring third-party capital to law firms and their clients, enabling the “have nots” to obtain better results. They allow firms to invest in their clients and in themselves, equipping both to succeed in the courtroom and the market square. These innovations also share something else: sustained opposition. California, Colorado, and Illinois advancing bills to limit the ability of ABSs and MSOs to serve those states’ citizens. Third-party litigation finance has long been a target of some federal and state lawmakers. A failed provision in last year’s federal reconciliation bill would have imposed an industry-crippling excise tax of more than 40% on litigation funding returns. Critics argue that third-party investment will undermine attorney independence. This is an important concern. But as Arizona recognized when it eliminated Rule 5.4, other professional responsibility rules already preserve that independence. Legal scholarship, including work I have done with Brian Fitzpatrick of Vanderbilt Law School, suggests that third-party finance will improve rather than undermine the attorney-client relationship. The cost of legal prohibitions on third-party finance is borne by the litigant who can’t find a lawyer willing to take a meritorious case because no firm can afford the risk. It’s borne by the small business that settles a legitimate claim because it cannot match its opponent’s litigation budget. And it’s borne by the party who shows up to an eviction hearing, a custody dispute, or a debt collection action without counsel—facing an adversary who has it. Kirkland’s announcement is a preview of where the legal market is headed: A world where only the largest firms can self-finance the technology that will define competitive advantage for a generation. AI and third-party investment can close that gap and expand access to justice—but only if policymakers let them. This article was originally published on June 4, 2026, on Bloomberg Law and is available here . Copyright 2026 Bloomberg Industry Group, Inc. (800-372-1033) www.bloombergindustry.com. Reproduced with permission.
MLex, a LexisNexis publication covering global regulatory intelligence, recently interviewed and quoted Certum Group’s William Marra in an article examining the U.S. International Trade Commission’s proposed rule that would require disclosure of third-party litigation funding in Section 337 patent investigations. The proposed rule, published in the Federal Register on April 30, 2026, would require parties and intervenors in Section 337 investigations to disclose certain entities that provide funding or hold approval rights over litigation or settlement decisions. The ITC stated that the proposal is intended to identify conflicts of interest, clarify whose rights are at issue, and promote settlement and transparency. Comments are due June 29, 2026. Marra expressed concerns about the asymmetrical nature of the proposed disclosure requirements. While the rule would reach third-party litigation funding, it would not require disclosure of personal loans, bank loans, insurance funding, or contingent fee arrangements. “If you want to have a rule requiring the disclosure of third-party finance… it is more appropriate to have a rule requiring the disclosure of any and all forms of third-party finance,” Marra told MLex, including contingency-fee arrangements. Marra argued that selectively targeting only certain forms of funding creates an uneven playing field. “To the extent that you have disclosure rules that are targeted only at specific forms of third-party funding and not others, you are going to give certain parties a strategic advantage or disadvantage,” he said. “We have nothing to hide. We don’t want to give the other side of litigation a strategic advantage.” Marra also highlighted the outsized burden that overly broad disclosure requirements can impose on smaller parties. “TPLF disclosure tends to impose a burden disproportionately on small- and medium-sized enterprises,” he said, drawing on arguments he made in a recent co-authored article in the Southern California Law Review . The full MLex article is available here .
We tend to view regulation and litigation as wholly separate enterprises. But federal regulatory agencies have always operated alongside private civil litigation, with each supplying functions the other cannot. Agencies set prospective standards and monitor compliance at scale. Litigation responds to concrete harm, remedying often unanticipated—or minimized—risks. Prior posts in this series traced the procedural mechanics of mass aggregation —from the equitable origins of representative litigation through Rule 23 to the modern MDL—and explained why those mechanisms exist as a structural response to the access failures of bilateral litigation . This post addresses a related but distinct question: Why private enforcement matters not just as a substitute for bilateral litigation, but as a necessary complement to public regulation. This symbiotic dynamic has held for decades, and an examination of that history underscores the importance of mass tort litigation as a regulatory backstop. The Structural Limits of Administrative Oversight The relationship between regulatory agencies and private litigation is complementary rather than redundant. Even at full capacity, administrative agencies face structural constraints that limit their effectiveness as enforcement mechanisms. The resource gap is the most straightforward. Regulated industries consistently outspend the agencies that oversee them. The pharmaceutical industry employs scientists, lawyers, and regulatory specialists whose collective depth of knowledge exceeds what any federal agency can match across its full portfolio of regulated products. An agency charged with monitoring thousands of products and reviewing hundreds of new applications annually necessarily operates with inherent informational disadvantages relative to the firms it oversees. The capture problem is more subtle but no less significant. Regulatory agencies are staffed, in significant part, by individuals who move between government service and the industries they regulate . This is not an indictment of those individuals—it reflects the reality that domain expertise concentrates in the private sector. But it nonetheless creates structural pressures that shape enforcement priorities in ways that do not always align cleanly with public interests. The latency problem is perhaps the most consequential. Pre-market approval is a snapshot, not an ongoing guarantee. An agency that approves a pharmaceutical compound based on clinical trial data cannot know what population-scale, long-term use will reveal. Post-market surveillance is resource-intensive and chronically underfunded . Harms that emerge years or decades after initial regulatory clearance may never trigger administrative enforcement action. These are not new problems. They have characterized the administrative state for decades, and they are precisely why private litigation has long served as a necessary counterpart to administrative enforcement. The Opioid Crisis: What Happens When Regulation Falls Short The opioid epidemic illustrates—at enormous human cost—what happens when regulatory oversight fails to keep pace with private-sector harm, and what private enforcement can accomplish when it fills the gap. The FDA approved OxyContin in 1995 based on clinical data that did not capture the addiction potential of mass-market, long-duration prescribing. Regulators, empowered to act against manufacturers and distributors flooding suspicious channels, were slow to exercise that authority at scale. State medical boards, operating in an environment shaped by industry-funded campaigns redefining pain management standards, did not flag prescribing patterns that, in hindsight, were plainly problematic. By the time the regulatory apparatus mobilized a meaningful response, hundreds of thousands of Americans had died. The tens of billions of dollars in settlements and judgments that followed came not through administrative action but through litigation— state attorneys general, municipalities, and private plaintiffs coordinated in MDL proceedings—that forced production of internal documents demonstrating what manufacturers and distributors knew and when they knew it. That information entered the public record through discovery. It informed subsequent regulatory responses, shaped public health policy, and produced one of the largest coordinated public health settlements in American history. PFAS and the Limits of Pre-Market Review Per- and polyfluoroalkyl substances—PFAS, or “forever chemicals”—illustrate a different dimension of the same structural problem. Manufacturers possessed internal research suggesting health risks associated with certain PFAS compounds for decades before that information became public. The EPA, constrained by the evidentiary standards of the Toxic Substances Control Act and facing significant industry opposition, did not set enforceable drinking water limits for the most common PFAS compounds until 2024 —roughly seventy years after their widespread industrial introduction. Private litigation, brought by communities near manufacturing facilities, military bases, and industrial sites, has produced more actionable information about PFAS health effects than decades of administrative process. Discovery in PFAS proceedings has surfaced internal documents , epidemiological data, and risk assessments that were never voluntarily disclosed. Those materials have informed subsequent regulatory action and generated the factual record on which ongoing public health policy depends. This is the information function of private litigation operating precisely as it should: Reaching into corporate decision-making in ways that administrative oversight either cannot compel or has not yet prioritized. Social Media and the Enforcement Frontier The current mass tort litigation against social media platforms for harms to adolescent mental health illustrates how private enforcement operates at the frontier of regulatory capacity. Congress has repeatedly attempted and failed to pass legislation governing platform design, algorithmic amplification, and the targeting of minors. The FTC’s authority is potentially applicable but has not been deployed at scale. The regulatory frameworks needed to establish clear standards remain, years into public awareness of the problem, largely unbuilt. Into that gap have stepped coordinated proceedings in federal MDL and state courts, alleging that platform features were designed with internal knowledge of their addictive potential and their disproportionate effects on adolescent development. Whatever the ultimate resolution of those cases, the litigation has already begun forcing into the public record information about internal product decisions and user research that no regulatory proceeding has yet reached. In March 2026, a California jury found Meta and YouTube liable for negligent platform design, rejecting both Section 230 and First Amendment defenses—the first bellwether verdict to hold platforms accountable for design-based harms to adolescents. Private enforcement is not a substitute for thoughtful legislation. But it is filling the gap that legislation has not occupied. The social media cases are, it should be noted, the most legally contested example in this series. Unlike pharmaceutical or chemical exposure litigation, platform liability claims must navigate Section 230’s broad immunity provisions and First Amendment questions that the opioid and PFAS cases did not present. The ultimate merits of these cases may differ from the prior examples. But even litigation that does not ultimately succeed forces into the public record information that regulatory silence cannot reach—and that distinction matters regardless of outcome. The Practical Consequence of a Smaller Administrative Footprint The structural argument for private enforcement as a complement to regulation is well-established. What fluctuations in agency capacity add is urgency. Regulation and private litigation each supply what the other cannot. Regulation operates ex ante , setting prospective standards based on information available at approval. Litigation operates ex post , responding to harm that has materialized with discovery tools that can reach information never voluntarily shared. Regulation generalizes across industries; litigation develops facts specific to individual defendants and affected populations. Where these functions operate in tandem, the enforcement system is more complete. Where one contracts, the other must bear more weight. When agency enforcement capacity declines—whether through budget reductions, staff attrition, or shifts in enforcement priorities—the civil justice system is not simply one option among several. For many categories of diffuse harm, it becomes the only remaining mechanism capable of generating accountability. Companies that externalize costs onto the public face reduced administrative scrutiny. The deterrence effect of potential enforcement weakens. The information that litigation forces into the public record, and that regulators themselves have often relied upon, is no longer generated. One need not have a settled view on the optimal scope of the administrative state to recognize this dynamic. The practical question is not whether federal agencies should be larger or smaller. It is whether, given the enforcement landscape that actually exists, the civil justice system is equipped to do the work that system requires. Conclusion The debate over federal regulatory scope will continue, as it should. Reasonable people hold genuine disagreements about the appropriate role of administrative agencies, and those disagreements deserve serious engagement. But the institutions available to enforce safety norms and produce corporate accountability do not wait for that debate to resolve. When the administrative footprint contracts, courts and private litigation occupy the space. Mass tort aggregation, as this series has argued from the beginning, is not a procedural anomaly or an artifact of plaintiff-side opportunism. It is a structural feature of how diffuse harm gets addressed in a system where regulation has never been sufficient on its own. That function does not become less important when regulatory capacity declines. It becomes more so. Oliver Wendell Holmes once observed that “[t]he life of the law has not been logic: it has been experience.” The Common Law 1 (1881). The experience of the opioid epidemic, the decades of PFAS contamination, and the accumulating evidence of adolescent harm from platform design all point to the same structural lesson: Regulation and private enforcement are not competitors in an institutional zero-sum game. They are partners in an enforcement system that neither can sustain alone. The debate about their proper balance will continue. But dismissing private enforcement as mere opportunism ignores what experience has consistently shown: When private enforcement is absent, no one else fills the gap.