In another welcome sign, the Advisory Committee on Civil Rules for the U.S. courts announced this week that it will continue to study the effects of third party litigation funding (TPLF) in civil litigation and the potential need for a disclosure requirement.
The group decided to send the issue from a small committee to a larger committee, which shows they are taking this seriously. Continued study on the issue is important. The TPLF industry has grown into an international juggernaut capable of wreaking havoc on legal systems around the world. Though perhaps the most dangerous part is that they can do it in secret.
When a funder fronts money for a lawsuit, they’re buying interest in its outcome. The court and other parties clearly have a right to know about this. They say they have no control over any decisions made during the course of the litigation, even though they openly talk about the tools they put in contracts to keep recipients in line, how they look for cases with massive damages asks, and even how they “make it harder and more expensive to settle cases.” There is currently no federal rule requiring the disclosure of TPLF arrangements. So presumably the funders are asking us to take their word for it—even though they’ve basically admitted several times that they need assurances on how the litigation strategy will go before they hand over the money.
The Committee’s attention comes at an important time. States like Wisconsin have passed laws that would require these arrangements be made public, and the Litigation Funding Transparency Act is before the U.S. Senate. We applaud the Committee for taking this important step.