Statement to the Subcommittee on Courts, IP, and the Internet on TPLF

This letter argues that third-party litigation funding (TPLF) has grown rapidly across U.S. courts while remaining largely hidden from judges, litigants, and the public due to the absence of uniform disclosure requirements. The statement contends that undisclosed funding arrangements can create conflicts of interest, allow outside investors to influence litigation and settlement decisions, complicate ethical obligations, and make it difficult for courts to determine who has a financial stake in a case. It further asserts that transparency is particularly important in patent litigation, mass torts, and class actions, where litigation funders may play a significant role in shaping legal strategies and outcomes.

The statement also raises concerns about the potential involvement of foreign investors and sovereign wealth funds in U.S. litigation, arguing that undisclosed funding could present national and economic security risks, including access to sensitive information and efforts to advance foreign interests through the court system. To address these concerns, it supports federal legislation requiring disclosure of litigation funding arrangements, the identities of funders and foreign funding sources, and the underlying funding agreements themselves. According to the statement, greater transparency would help courts identify conflicts, assess the influence of funders, facilitate fair settlements, enforce ethical standards, evaluate class certification and discovery issues, and ensure confidence in the administration of justice.