Why Ask About TPLF?

Courts and parties to civil litigation must Ask About TPLF in order to know who is controlling decisions in the courtroom, avoid conflicts of interest and disruptions to the legal process, and comply with basic procedural rules. Today banks, Wall Street hedge funds, foreign sovereign wealth funds and other entities invest secretive third-party funding in lawsuits and have more than $15 billion in assets dedicated to U.S. civil litigation — betting that they can earn big returns from large legal judgments and settlements.

Because these funding arrangements are usually not disclosed, courts and parties don’t know:

• how many or which cases potentially involve such funding,
• the extent of the funders’ influence or control over decisions,
• the potential for conflicts or
• the role or impact that third-party funders may have in cases.

These are all reasons why courts and parties need to Ask About TPLF — and need to ask about it in the right way. Unfortunately, the approach some courts use to raise the topic – verbally in open court or ex parte in chambers – is ineffective and unfair. Courts should order disclosure of TPLF agreements, and a rule is needed to provide a consistent process across all federal courts.