Solutions

Although the issues TPLF raises can be complicated, the solutions are simple: Courts should AskAboutTPLF by ordering disclosure of TPLF agreements in their civil cases, and the FRCP should be amended to provide a simple, uniform procedure for disclosure of TPLF agreements in all federal district courts.

How to Ask About TPLF

Courts and parties should follow these general guidelines when asking about TPLF:

Ask whether there is any non-party funding available to parties in the case involving repayment terms that are contingent on the outcome of the case;

Require the disclosure of any such agreements to all the parties and the court — versus ex parte discussions or in camera review — so parties can adequately assess them and, if necessary, brief the court if they pose any conflicts, control issues or other problems. This also allows parties to make “realistic appraisals” of the case; ​

If there is proprietary, confidential, or privileged information in these agreements, it should be redacted – just as occurs with many other documents courts handle in the normal course of litigation.  

2024 Judicial Conference Subcommittee Formation

Lawyers for Civil Justice (LCJ) has proposed four amendments to the federal procedural rules that would require or facilitate disclosure of third-party litigation funding in civil litigation through simple and uniform procedures:

The federal Advisory Committee on Civil Rules formed a subcommittee in October 2024 to examine the role of TPLF in federal courts and whether new or amended rules are needed.

The formation of the TPLF Subcommittee is an important step towards a much-needed uniform procedure for disclosure. Undisclosed TPLF has been a disruptive force in courtrooms nationwide resulting in a patchwork of court practices and conflicting responses from courts to requests for disclosure. LCJ advocates for a simple, uniform procedure for TPLF disclosure in all federal civil cases.

Federal Rules Proposals

Lawyers for Civil Justice (LCJ) has proposed four amendments to the federal procedural rules that would require or facilitate disclosure of third-party litigation funding in civil litigation through simple and uniform procedures:

  • Amend FRCP 26 to add TPLF agreements to the list of initial disclosures a party must provide to other parties in the litigation without awaiting a discovery request, similar to how insurance agreements are currently treated. Read more here.

  • Amend FRCP 16 to add TPLF agreements to the list of topics that parties discuss among themselves and with the court during initial conferences. This would alert parties and judges to the presence of non-parties who have a direct financial stake in the case and facilitate discussion of the issues that TPLF may present. Read more here.
  • Amend FRCP 7.1. to provide TPLF disclosures to the court so judges can be properly informed when determining if they need to recuse from a case due to conflicts of interest. Read more here.
  • Amend Federal Rule of Appellate Procedure 26.1 to require disclosure of non-party financial stakes directly tied to the outcome of proceedings pending before the United States Courts of Appeals. Read more here.

The purpose of these disclosure amendments is to promote a greater “culture of compliance” in the federal judiciary concerning conflicts of interest, provide transparency about TPLF funding, create uniformity of procedures in place of the current patchwork of local disclosure requirements and decisions by individual courts, and ensure that judges and parties have the information they need to manage the control, cost and confidentiality concerns described above.

However, there is no reason to wait for these rules to be enacted. Litigants, attorneys, and judges should Ask About TPLF in their cases today.

Existing Rules

Some federal districts and state courts have enacted limited requirements for the disclosure of TPLF. While these measures reflect the growing concerns about the problems TPLF may cause, they have significant limitations as they only apply to cases in particular jurisdictions and they are not consistent.  Only a federal rule will ensure that TPLF is disclosed consistently across the U.S. federal court system.

Local Federal District Rules

  • The Northern District of California requires some TPLF disclosure, but the District’s requirements only apply to class action suits.
  • USDC for Delaware Chief Judge Connolly’s Standing Order on TPLF Disclosure: A standing court order requiring TPLF disclosure, issued by Judge Colm Connolly, Chief Judge of the USDC for the District of Delaware, requires specific information on funding agreements and the nature of funding arrangements, where there is funding “on a non-recourse basis” in exchange for a (1) financial interest contingent on the outcome of the litigation, or (2) a non-monetary result that is not in the nature of a loan or insurance.
  • New Jersey

TPLF in the News

October 16, 2024

Fortress’ Billions Quietly Power America’s Biggest Legal Fights

Bloomberg Law

By Emily Siegel

October 10, 2024

US judicial panel to examine litigation finance disclosure

Reuters

By Nate Raymond

October 10, 2024

Litigation funder backs cases over NJ law shielding info on judges, officials

Reuters

By Nate Raymond

October 10, 2024

Inventors Group to U.S. Courts Committee: Don’t be Duped by Corporate Call for Litigation Funding Transparency 

IP Watchdog

By Eileen McDermott

Ask About TPLF is an Initiative of Lawyers for Civil Justice
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LCJ is a non-profit 501(c)(6) trade association and does not employ any attorneys for hire.  

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