Third party litigation funding (TPLF) is a multi-billion-dollar industry that allows hedge funds and outside financiers to secretly invest in lawsuits in exchange for a percentage of any settlement or award. Without mandatory disclosure, defendants, judges, and sometimes even the plaintiffs do not know who is funding or controlling the underlying litigation.
On May 8, 2023, ILR, along with 34 other groups, submitted a letter to urge the Advisory Committee on Civil Rules (Committee) to amend Rule 26 of the Federal Rules of Civil Procedure to require disclosure of TPLF arrangements in any civil action filed in federal court.
Recent TPLF developments, particularly a pending lawsuit alleging that the world’s largest litigation funder seized control of litigation in which it invested, the growing pervasiveness of TPLF usage in the U.S., and increased (but differing) judicial approaches to monitoring TPLF, highlight why a mandatory uniform disclosure requirement is needed and why the Committee should ultimately adopt the proposed amendment to Rule 26.
The letter also highlights the growing concern that the near-total lack of transparency means there could be large volumes of foreign-sourced money pouring into U.S. litigation against American companies and the implications TPLF could have on national security.
For more information, check out ILR’s webpage about TPLF.
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