Will Congress demand disclosure of litigation-funding sources?

Many of our readers are consumer class-action litigators or interested in litigation more generally. So I thought it was worth mentioning Senator Chuck Grassley's legislation, introduced last week, that would require disclosure of outside litigation funding in multi-district litigation and in class actions generally (that is, in class actions both inside and outside multi-district litigation).

Senator Grassley's bill, entitled the Litigation Funding Transparency Act of 2018, is short and simple. It would require plaintiffs' lawyers to

[1] disclose in writing to the court and all other named parties to the … action the identity of any commercial enterprise, other than a class member or … counsel of record, that has a right to receive payment that is contingent on the receipt of monetary relief in the … action by settlement, judgment, or otherwise; and [2] produce for inspection and copying, except as otherwise stipulated or ordered by the court, any agreement creating the contingent right.

This post provides our readers links to materials that may be helpful in assessing the legislation and analyzing the issue of litigation funding more generally. So read . . .

  1. Senator Grassley's legislation (co-sponsored by Senators Tillis and Cornyn) and Senator Grassley's press release
  2. A Bloomberg Law piece on the legislation, which includes a critique from a litigation-funding company
  3. A 2015 piece more generally discussing litigation funding
  4. A comprehensive 2011 American Bar Association white paper on litigation funding. It's chock full of law-review citations, references to studies, etc. 
  5. A National Law Journal piece by Ben Hancock published today entitled Study Finds Judges Mostly Reject Discovery Requests for Litigation Funding Documents. This piece notes that "[t]he conclusion of the study—that judges rarely grant discovery into litigation funding documents—helps explain why opponents of the [litigation-funding] industry are pushing for legislative and rule changes to require that funding agreements be disclosed." It's worth noting the study's small sample size. The survey "identified [only] 30 cases across the United States in which a party sought to force disclosure of the other sides’ litigation financing documents."

HT to legal reporter Perry Cooper (@PerryECooper) for pointing me to some of this information.


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