For better or worse, the public may soon have an opportunity to invest in lawsuits against a wide range of defendants for ideological reasons, for profit, or both. Potential defendants include tobacco companies, gun manufacturers, banks, drug companies, birth control/induced abortion providers, coal mining companies and any other defendant investors don’t like, or simply want to sue for profit.
And Congress has perhaps lent a helping hand. The Jumpstart our Business Startups (JOBS) Act of 2012 makes it a lot easier to raise capital without the expensive process of filing a registration statement with the SEC. One significant innovation in the Act is "crowd funding", a process by which a large number of investors are solicited -- for example over the Internet -- to contribute modest amounts of capital that add up to a lot of money (the Act allows an issuer to raise $1 million every 12 months, which when combined with other funding options and/or lawyers' contingent fees can be enough money to fund a major lawsuit for a year). The JOBS Act also raises the dollar cap for unregistered Regulation A public offerings to $50 million; and also lifts restrictions on solicitation of accredited investors in Regulation D private placements. Combine these relatively inexpensive modes of conducting an offering with innovative arrangements for financing litigation, and there are many possibilities for plaintiffs to reach out to investors for financial support.
There are also many important ethics issues for lawyers as well as securities law issues for litigation finance companies. I have posted a brief discussion of relevant securities laws on a web site hosted by Professor Maya Steinitz, who is the most prominent academic studying litigation finance arrangements these days:
http://litigationfinancecontract.com/litigation-financing-and-the-securities-laws/