The recent case of Terry Bollea v Gawker Media has all of the ingredients of a juicy headline-grabber – aging ex-wrestler sporting a handlebar moustache, a sex-tape showing Hulk Hogan in bed with the wife of his best friend (who incidentally legally changed his name to “Bubba the Love Sponge” in 1999) and a $140m jury verdict in Hulk Hogan’s favour.

However, the case has also grabbed headlines in the litigation funding world. It emerged after the verdict that Hulk Hogan’s legal costs were being financed by none other than Silicon Valley tech billionaire, Peter Theil (one of the original “PayPal mafia”), allegedly in revenge against Gawker media for “outing” Thiel as being gay in 2007. If so, the investment certainly paid off for Theil, as Gawker Media has filed for bankruptcy following the verdict.

The case has sparked debate in the US about privacy, free speech and the role of the media, however a number of commentators have also cited this case as an example of the dangers of the emerging (and still controversial) American third party litigation funding market. A situation in which a billionaire has financed another party’s litigation, in order to take down a troublesome media company out of personal gripe, has provided ammunition for those in the US that still regard the practice of third party funding to be a cynical and opportunistic misuse of the justice system – memorably described by Martha White recently as “Wall Street dragging a roulette wheel into the court room”.

In reality of course, Hulk Hogan’s case has little to do with the business of third party funding. Here Theil was motivated not by commercial gain but, it is said, by a desire to teach Gawker media a lesson. Theil himself was quoted as saying “It’s less about revenge and more about specific deterrence” in an interview given after being unmasked as the mystery funder. It appeared that Theil had a team of lawyers specifically seeking out cases against Gawker Media that Theil could support.

The American litigation funding establishment has rushed to distance itself from the case, pointing out that when they invest in litigation, it is a dispassionate commercial decision made solely for financial gain, rather than to push some political or personal agenda. However, the fact remains that many see little distinction between the two and the US legal profession remains hesitant to fully embrace third party funding as result.

So what does Hulk Hogan tell us about litigation funding?

In short, not very much. This was a highly unusual case involving a number of colourful individuals, none of whom can really claim much by way of moral high ground.

However, if the case highlights anything, it is the continued reluctance from some corners of the American legal profession to accept the idea of third party funding.

Here, it is interesting to draw a contrast with the UK market. The Court of Appeal blessed the idea of third party funding in 2006 and it has since flourished as a legitimate and respectable way of financing litigation. It is now fairly universally accepted as offering access to justice to those that otherwise could not afford to litigate, whilst creating potentially lucrative opportunities for investors that can stomach the risks involved.

In England, third party funding predates the use of contingency fees in litigation by many years. I still remember lively conference debates in London in 2009 and 2010 in which sceptics argued feverishly about the perils of conflicts of interest and the fostering of a “an American-style compensation culture” if lawyers were allowed to share in their clients’ damages; all of which against the backdrop of a tacit acceptance that third party funding created no such issues.

It is fascinating to contrast this to the debate which currently rages in the US. I have read several articles where commentators have argued persuasively the complete reverse: that lawyer contingency fees arrangements offer important safeguards not present in third party funding. For example, the fact that a lawyer has a duty to act in the best interests of the client, whilst the funder’s only duty to its investors or shareholders.

In spite of the detractors, it seems inevitable that third party funding will continue to flourish and develop in the American market. However, the industry stakeholders have an important role to play in how this business in perceived. If third party funding is used by well-advised parties on sensible commercial terms and in cases which do not carry political or other agendas, it is difficult to criticise objectively. Disclosure is also key to perception – if the funder’s existence and identity is hidden (as it was in Hulk Hogan’s case), it is far easier to criticise the shadowy influence of the funder, than if the funding arrangement is disclosed voluntarily to the defendant and to the court early on in the case.