Federal legislation takes aim at third-party litigation funders
U.S. Rep. Darrell Issa, a California Republican, speaks during a House Judiciary Committee field hearing on New York City violent crimes in New York City on April 17, 2023. (Photo from Shutterstock)
The House Judiciary Committee is taking on legislation that targets agreements in which companies advance money to plaintiffs attorneys in return for a percentage of settlements or judgments in court.
Third-party litigation funding, as the practice is commonly known, doesn’t have to be disclosed in most federal or state courts, according to Legal Newsline.
That would change if House Resolution 1109, the bill introduced by U.S. Rep. Darrell Issa, a California Republican, becomes law.
Titled the “Litigation Transparency Act of 2025,” it aims “to provide for transparency and oversight of third-party beneficiaries in civil actions.”
Critics of third-party litigation funding have expressed concerns that the arrangements are not traditional loans and subject to usury laws, Legal Newsline reports. They also contend that the arrangements encourage frivolous lawsuits and give investors too much control over litigation.
Opponents of third-party litigation funding reform, however, say changes could make it easier for a plaintiff’s financial situation to become public, Legal Newsline reports.
The House Judiciary Committee will consider the bill Tuesday.
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