Class action lawsuits are an area of the law that is consistently growing in its use of litigation funding. With this growth have come many calls for disclosure of when a member of a class action suit is using a third party funder. However, the federal rules do not currently require disclosure of third party funding agreements before certification of the class. This blog post considers one of the main suggestions for litigation funding disclosure in class action cases: in camera review.
The Honorable Jack Weinstein first proposed in camera review. This rule would impose an affirmative obligation on parties with third party funding agreements to disclose the agreements to the court for in camera review at the start of litigation or whenever the agreement is formed if it is formed after litigation starts.
This is suggested as a happy middle for both litigation finance companies and adversary parties because it would allow the judge to ask questions about the funders involvement in the case and potentially uncover if there were any conflicts of interest while also maintaining the plaintiffs right to privacy under the work product doctrine. In camera review would be a Rule amendment to Rule 23(g)(1)(c) which already authorizes courts to disclose information about fee arrangements when considering appointment of class counsel.
However, there are some potential issues with in camera review. For one, it sacrifices clarity that a rule of mandatory disclosure or a rule of nondisclosure would provide because now there is information known by the judge and the judge has decisions to make. A judge could find that work product doctrine is not applicable and disclose the agreement to the other party or the judge could limit review of the funding arrangement to in camera review and require class counsel to send opt-out notifications to all the potential plaintiffs with certain information about the funding agreement. This leaves a lot up to the judges’ discretion when it may not be known how a judge feels about litigation finance.
So far there have been no final decisions made about regulation or disclosure in litigation finance but it is important to weigh all the options and be informed.
Topics: litigation finance, alternative litigation finance, third party funding, disclosure, in camera review, regulation, class action lawsuits
Works Cited: Aaseesh P. Polavarapu, Comment: Discovering Third-Party Funding in Class Actions: A Proposal for In Camera Review, University of Pennsylvania Law Review Online (2017).