Disclosure: It’s the Claimant’s Choice

Often, claimants considering litigation financing ask whether their potential financing must be disclosed to U.S. courts.  For now, the answer is no.  Rule 26 of the Federal Rules of Civil Procedure requires initial disclosure of a range of information including documents and materials that their party expects to use to support their claims or defenses, among other things. However, this rule does not require all potential disclosures, including litigation financing agreements.

The U.S. Chamber of Commerce is attempting to change this. Earlier in 2017, the Chamber proposed that Rule 26 be changed to require disclosure of all litigation financing arrangements in federal cases.  Specifically, the chamber is trying to change the rule to read “any agreement under which any person, other than an attorney permitted to charge a contingent fee representing a party, has a right to receive compensation that is contingent on, and sourced from, any proceeds of the civil action, by settlement, judgment, or otherwise.

In 2014, this same proposal was made.  But, the Advisory Committee on Civil Rules rejected it. This new proposal will return to the same committee, which will review it.  If passed, the earliest the rule change can become good law will be on December 1, 2019.

As what happened in 2014, this renewed proposal has been met with significant opposition.  Litigation finance is a developing field and much of the debate concerning this rule centers on the overall merits of litigation financing, not in its value.

However, as time has passed, litigation financing has become much more regulated and researched.  To date, there have been few studies that have come close to overturning litigation finance’s image of being an assistant to the common man.  If disclosure were to be required, inequality will once again be prevalent throughout the justice system.

Keywords: litigation finance, U.S. Chamber of Commerce, disclosure, arrangements

Work Cited:  Garrett Ordower, Litigation Finance Disclosure: It’s the Claimants Choice, For Now, Above the Law (October 12, 2017)