What's Happening?
Proposals for mandatory disclosure of third-party litigation funding contracts have faced criticism from the judiciary in Delaware and Texas. Advocates argue that funders exert significant control over
litigation, but this claim has been rejected by both state judiciaries and practitioners in the commercial litigation funding field. The Delaware judiciary found that funders do not obtain control rights over lawsuits, while the Texas Supreme Court Advisory Committee voted against rulemaking, suggesting that disclosure aims to deter litigation funding rather than address genuine concerns.
Why It's Important?
The debate over litigation funding disclosure highlights tensions between transparency and the practicalities of litigation funding. Critics argue that mandatory disclosure could deter funding and limit access to justice for parties relying on financial support to pursue legal claims. The judiciary's rejection of control arguments suggests that existing ethical rules and contractual terms adequately address concerns about funder influence. The outcome of this debate may impact the future of litigation funding and access to justice in the U.S.
Beyond the Headlines
The broader implications of this debate include potential shifts in the legal landscape regarding third-party funding and its role in facilitating access to justice. The rejection of disclosure proposals may reinforce the status quo, allowing litigation funding to continue without additional regulatory burdens. However, ongoing discussions may lead to alternative approaches to ensure transparency and accountability in litigation funding.
