WASHINGTON – Senate Judiciary Committee Chairman Chuck Grassley (R-Iowa) and Sens. Thom Tillis (R-N.C.), John Kennedy (R-La.) and John Cornyn (R-Texas) today introduced the Litigation Funding Transparency Act. The legislation would require parties to publicly disclose third-party litigation funding, including foreign funding, in mass tort and class action suits. The bill also prohibits any third-party funder from influencing litigation strategy or settlement negotiations, as well as obtaining, inspecting, copying or viewing any material produced in discovery that is subject to a protective order.
“Transparency brings accountability. For too long, obscure third-party litigation funding agreements have secretly funneled money into our civil justice system without any meaningful oversight. Americans should know if there are undue pressures at play that could needlessly prolong litigation, harm claimants’ interests or benefit foreign adversaries. The Litigation Funding Transparency Act strikes the right balance of sunshine, while protecting Americans’ access to justice,” Grassley said.
“Predatory litigation financing allows outside funders, including those backed by foreign governments, to profit off our legal system, driving up costs for families and delaying justice,” Tillis said. “This legislation will bring overdue transparency and accountability to these abusive practices.”
“The American people deserve to know when corporations and foreign states pour money into class action lawsuits to influence outcomes. I’m proud to work together with my friend Chairman Grassley to introduce the Litigation Funding Transparency Act, which would lift the lid on the entities funding important legal battles in our country,” Kennedy said.
“By requiring the disclosure of third-party litigation funding, this commonsense bill would restore transparency and accountability to a system that has been plagued by dark money and foreign influence for far too long, and I’m proud to support it,” Cornyn said.
Circumstances that would require disclosure under the Litigation Funding Transparency Act include:
Domestic, nonprofit legal organizations that provide services on a nonprofit basis are exempt from reporting requirements under the Litigation Funding Transparency Act. Additionally, commercial enterprises expecting repayment of a loan or reimbursement of fees or grants paid to counsel are exempt from reporting requirements.
The Litigation Funding Transparency Act is endorsed by the U.S. Chamber of Commerce, the American Property Casualty Insurance Association (APCIA), the National Insurance Crime Bureau (NICB) and the High Tech Inventors Alliance.
“Outside financiers treat our court system like a casino. They drive up costs for consumers and put our national and economic security at risk. Americans should not be taken advantage of in our own courtrooms,” said Stephen Waguespack, President of the U.S. Chamber of Commerce Institute for Legal Reform. “All parties involved in class actions and multi-district litigation cases should know who is secretly bankrolling the cases and manipulating the outcomes for profit. Requiring the disclosure of these hidden financial interests will protect American businesses and safeguard the integrity of our justice system. The U.S. Chamber of Commerce thanks Senators Grassley, Tillis, Kennedy and Cornyn for their leadership on this critical issue and we encourage the Senate to advance this legislation.”
“APCIA strongly supports Senator Grassley’s Litigation Funding Transparency Act. Bringing transparency to third party litigation funding is a commonsense step that protects consumers and strengthens the integrity of our civil justice system. We applaud Senator Grassley’s leadership in advancing reforms that promote fairness and accountability,” said Sam Whitfield, Senior Vice President of Federal Government Relations and Political Engagement of APCIA.
“From on-the-ground investigations of criminal fraud rings to sophisticated analytics of litigation marketing campaigns, NICB has seen firsthand how third-party litigation funding can serve as a facilitator of insurance fraud, which increases costs for everyone,” said David J. Glawe, President and Chief Executive Officer of the NICB. “NICB applauds Chairman Grassley’s introduction of the Litigation Funding Transparency Act, which will help combat the improper incentives that attract fraudsters through improved transparency and accountability.”
"We thank Chairman Grassley for taking up this critically important issue and commend him for introducing legislation that would improve transparency regarding who is funding litigation in U.S. courts and whether these funders are improperly controlling plaintiffs’ litigation decisions,” said Dave Jones, Executive Director of the High Tech Inventors Alliance. "For too long, a lack of transparency has allowed funders to control litigation against U.S. companies from the shadows, while often themselves being funded or controlled by anonymous foreign investors and foreign governments’ sovereign wealth funds. Congress should act to require much needed transparency to prevent hedge funds and foreign interests from secretly manipulating our legal system to the detriment of U.S. companies and the broader U.S. economy.”
Bill text is available HERE.
-30-