Letter to Advisory Committee on Civil Rules to Adopt Mandatory Uniform Disclosure of Third Party Litigation Funding

H. Thomas Byron III
Secretary, Committee on Rules of Practice and Procedure
Administrative Office of the United States Courts
Washington, D.C. 20544

Dear Mr. Byron:

On behalf of the Advanced Medical Technology Association, the American Property Casualty Insurance Association, the American Tort Reform Association, the Association of Defense Trial Attorneys, the Computer & Communications Industry Association, DRI Center for Law and Public Policy, the Federation of Defense & Corporate Counsel, the Florida Justice Reform Institute, the High Tech Inventors Alliance, Insurance Information Institute, the International Association of Defense Counsel, the Lawsuit Reform Alliance of New York, Lawyers for Civil Justice, Louisiana Legal Reform Coalition, the Michigan Chamber of Commerce, the Montana Chamber of Commerce, the National Association of Mutual Insurance Companies, the National Association of Wholesaler-Distributors, the New Jersey Civil Justice Institute, NFIB, the National Retail Federation, the Ohio Chamber of Commerce, the Pennsylvania Chamber of Business and Industry, the Pennsylvania Coalition for Civil Justice Reform, the Pharmaceutical Research and Manufacturers of America, the Product Liability Advisory Council, Inc., the Small Business & Entrepreneurship Council, the South Carolina Chamber of Commerce, the State Chamber of Oklahoma, the Texas Civil Justice League, the U.S. Chamber of Commerce, the U.S. Chamber of Commerce Institute for Legal Reform, the Vegas Chamber, the Virginia Chamber of Commerce, and Wisconsin Manufacturers & Commerce, we write in further support of the pending proposal to amend the Federal Rules of Civil Procedure to require disclosure of third-party litigation funding (“TPLF”) investment arrangements in any civil action filed in federal court.

Recent TPLF developments—including a pending lawsuit alleging that the world’s largest litigation funder has exercised control over litigation in which it has invested, the growing prevalence of TPLF in the United States, and increasingly divergent judicial approaches to monitoring TPLF—underscore the urgent need for a uniform, mandatory disclosure rule.

Notes:

1. A full list of signatories appears on page 11; descriptions are attached as Appendix A.
2. The proposed amendment to Rule 26(a)(1)(A) was initially submitted June 1, 2017, and supplemented November 3, 2017.

I. Evidence of Funder Control Demonstrates the Need for Mandatory Disclosure

The undersigned appreciate the Committee’s continued consideration of this proposal. However, mischaracterizations by the litigation funding industry regarding their role in funded litigation have delayed formal action. Industry representatives frequently claim they act solely as passive investors who exert no influence over litigation strategy or settlement decisions.

Recent litigation contradicts this narrative. In Sysco Corp. v. Glaz LLC (N.D. Ill. 2023), Sysco alleged that its litigation funder, Burford Capital, obstructed settlements and exercised contractual veto power over litigation decisions. According to court filings, Burford allegedly required modifications to its funding agreement granting it the right to review and reject settlement offers, so long as its consent was not “unreasonably withheld.”

If accurate, these allegations directly contradict Burford’s public representations and demonstrate why automatic disclosure of litigation funding agreements is critical. Without disclosure, courts and opposing parties cannot assess whether a funder exercises control that may undermine ethical obligations, deter reasonable settlements, or prolong litigation unnecessarily.

The Sysco dispute is not an isolated example. The Committee’s record contains numerous examples of funding agreements that afford funders varying degrees of influence or control, including authority over counsel selection, settlements, or litigation strategy. No actual funding agreements lacking control provisions have been presented to the Committee.

Automatic disclosure would subject funders’ claims of non-control to the adversarial process, providing an essential safeguard against abuse.

II. Growth of Third-Party Litigation Funding Raises Systemic Concerns

TPLF has become deeply embedded in U.S. litigation. Estimates place annual U.S. litigation funding investment between $2.3 billion and $5 billion, with U.S. markets accounting for more than half of the $17 billion invested globally.

A 2022 GAO report found that litigation funding more than doubled between 2017 and 2021. Funders themselves have publicly reported record growth and profitability. Litigation funding now spans intellectual property, antitrust, fraud, asset recovery, and personal injury cases. Former U.S. Attorney General Michael Mukasey has estimated that approximately 25% of U.S. patent cases involve third-party funding.

The industry has also evolved toward portfolio funding, increasingly financing bundles of cases or providing capital directly to law firms rather than single plaintiffs. Nearly 70% of funder capital commitments now go toward such portfolio arrangements.

Foreign Influence Concerns

The rise of sovereign wealth fund involvement in U.S. litigation funding raises national security and economic concerns. Several large funders maintain undisclosed partnerships with foreign state-owned investment funds. These arrangements raise the possibility that foreign actors may exploit U.S. courts to advance strategic, economic, or geopolitical interests—without any transparency.

Judges have a right to know whether such non-merits-related interests may be influencing the litigation before them.

III. Inconsistent Judicial Approaches Underscore the Need for National Standards

Judicial awareness of TPLF is increasing, but approaches vary widely:

• Some judges require disclosure as part of leadership appointments in MDLs.
• Others have standing orders compelling disclosure of funding arrangements and related approval rights.
• Several districts have adopted local rules, but these rules vary significantly in scope and detail.

For example:

• District of New Jersey: Requires disclosure of funder identity, approval rights, and financial interest in all cases.
• Northern District of California: Requires limited disclosure only in class and representative actions.
• District of Delaware: Standing order applies only to cases before a specific judge.

This patchwork creates inconsistent transparency based solely on forum selection. There is currently no nationwide requirement to disclose litigation funding agreements in federal court.

The proposed amendment to Rule 26 would resolve this inconsistency by:

• Clearly defining litigation funding subject to disclosure
• Requiring disclosure of actual funding agreements
• Ensuring adversarial review rather than ex parte judicial consideration

Conclusion

The allegations in the Sysco case highlight the substantial risks of undisclosed litigation funding. Without mandatory disclosure, courts and opposing parties may remain unaware of hidden influences over litigation.

Some funders have recently expressed tentative support for limited disclosure, recognizing that transparency may encourage settlements and clarify industry practices. Nevertheless, meaningful reform requires adoption of the proposed amendment to Rule 26.

For these reasons, we urge the Committee to recommend adoption of the proposed amendment to Fed. R. Civ. P. 26(a)(1)(A).

Signatories

Organizations Include:

Advanced Medical Technology Association
American Property Casualty Insurance Association
American Tort Reform Association
Association of Defense Trial Attorneys
Computer & Communications Industry Association
DRI Center for Law and Public Policy
Federation of Defense & Corporate Counsel
Florida Justice Reform Institute
High Tech Inventors Alliance
Insurance Information Institute
International Association of Defense Counsel
Lawsuit Reform Alliance of New York
Lawyers for Civil Justice
Louisiana Legal Reform Coalition
Michigan Chamber of Commerce
Montana Chamber of Commerce
National Association of Mutual Insurance Companies
National Association of Wholesaler-Distributors
National Retail Federation
New Jersey Civil Justice Institute
NFIB
Ohio Chamber of Commerce
Pennsylvania Coalition for Civil Justice Reform
Pennsylvania Chamber of Business and Industry
Pharmaceutical Research and Manufacturers of America
Product Liability Advisory Council, Inc.
Small Business & Entrepreneurship Council
South Carolina Chamber of Commerce
State Chamber of Oklahoma
Texas Civil Justice League
U.S. Chamber of Commerce
U.S. Chamber of Commerce Institute for Legal Reform
Vegas Chamber
Virginia Chamber of Commerce
Wisconsin Manufacturers & Commerce

Appendix A – Summary of Signatory Organizations

(Detailed descriptions of each organization follow, retained from the PDF and preserved in paragraph and bullet form.)

Appendix B – Proposed Amended Rule

Proposed addition to Fed. R. Civ. P. 26(a)(1)(A):