LCJ and the ILR Urge Adoption of a Uniform TPLF Disclosure Rule
Lawyers for Civil Justice and the U.S. Chamber Institute for Legal Reform are proposing an amendment to FRCP 26(a)(1)(A) requiring disclosure of third-party litigation funders and their funding agreements to courts and parties. Disclosure of this information is necessary for good case management, and the rule will provide uniformity in TPLF disclosure procedures. The joint Rules Suggestion argues that Rule 26(a)(1)(A) is the appropriate location for a TPLF disclosure requirement for the same reasons the Advisory Committee on Civil Rules decided to place the requirement to disclose insurance there.
Read the new LCJ and ILR Rules Suggestion here.
LCJ’s analysis of actual TPLF contracts, available here, demonstrates that funders—who are nonparties to the litigation—not only share in the proceeds of litigation but also have the ability to influence or control litigation and settlement decisions.
The newly proposed rule will reduce judicial burdens while allowing for adjudication of motions for protective orders in the normal course of litigation. The rule proposed by LCJ and ILR would amend Federal Rule of Civil Procedure 26(a)(1)(A) to require the disclosure of third-party funding contracts, in addition to basic information on funders.
The Rules Suggestion comes ahead of the April 14th meeting of the Advisory Committee on Civil Rules. The Advisory Committee formed a TPLF subcommittee to consider the need for a disclosure rule in October 2024, after LCJ and the ILR called for the initiation of a rules process. Since that time, the TPLF subcommittee has engaged in a listening tour to gather information on whether a rule is necessary and what it may require. The Advisory Committee is expected to discuss the possibility of a new rule at its April meeting.
The new LCJ and ILR Rules Suggestion argues that a uniform rule is necessary because the lack of TPLF disclosure causes serious problems for America’s courts, including:
Conflicts of interest between funder and parties to the case and/or witnesses remain hidden;
Time wasted in negotiations between parties who do not have the authority to make dispositive decisions about the resolution of the litigation; and
“Zombie” litigation in which litigation continues at the behest of funders despite the parties’ desire to settle.
The LCJ and ILR press release on the Rules Suggestion is available here. Additional resources for the bench, the bar, and the public on TPLF disclosure are available on LCJ’s dedicated website, www.AskAboutTPLF.com.