Congress Continues Efforts to Reform Litigation Funding Disclosure

What's Happening?

Efforts to reform litigation funding disclosure are ongoing in Congress, with a focus on third-party litigation funding (TPLF) in federal civil cases. Rep. Darell Issa, chairman of the House Subcommittee on Courts, Intellectual Property, Artificial Intelligence, and the Internet, held a hearing addressing foreign abuse of U.S. courts, particularly by the Chinese Communist Party. Issa introduced the Litigation Transparency Act of 2025, which mandates disclosure of TPLF. The American Property Casualty Insurance Association (APCIA) supports the reform, citing risks to the civil justice system and economic security. TPLF is criticized for inflating litigation costs, impacting consumer and business expenses, including insurance costs.

Why It's Important?

The push for TPLF reform is significant as it addresses concerns about transparency and fairness in the U.S. legal system. The involvement of foreign entities in litigation funding raises national security and economic implications, potentially affecting the cost of living and business operations. The reform efforts aim to protect the integrity of the legal system and ensure equitable access to justice. Stakeholders, including insurers, businesses, and consumers, stand to benefit from increased transparency, which could lead to reduced litigation costs and more predictable legal outcomes.

What's Next?

Legislative efforts will continue as Congress debates the merits of TPLF disclosure. The Litigation Transparency Act and the Protecting Our Courts from Foreign Manipulation Act, introduced by Rep. Ben Cline, aim to regulate foreign involvement in U.S. litigation. These bills could lead to significant changes in how litigation funding is managed and disclosed, impacting legal practices and insurance policies. The outcome of these legislative efforts will be closely watched by industry groups and legal professionals, as they could reshape the landscape of civil litigation.

Beyond the Headlines

The debate over TPLF reform highlights broader issues of legal ethics and the influence of foreign entities in domestic affairs. The potential for foreign manipulation of the U.S. legal system raises questions about sovereignty and the protection of national interests. As Congress navigates these complex issues, the balance between transparency, security, and economic impact will be crucial in shaping effective policy solutions.