I mean, given the cost of litigation, and the inability to get counter-judgement (IE attorneys fees), this is already enough "reason".

These are litigation funding exercises, so the goal is protection of the "investors".

But you'd also get things like protection against discovery (the smaller entity has nothing to give you), etc.

This is the sort of thing where they go too far, and end up in jail despite thinking they're just good at playing the system. (see, e.g., prenda law)