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Issa Introduces Transparency Legislation Reforming Third Party Financed Civil Litigation

March 19, 2021


Washington, DC – In conjunction with Sunshine Court Transparency Week, Congressman Darrell Issa (CA-50), Ranking Member of the House Judiciary Courts Subcommittee, introduced the Litigation Funding Transparency Act to disclose third-party litigation financing agreements in civil lawsuits. 

Civil litigation can be funded by third parties – including hedge funds and other commercial lenders – without disclosure. The bill would require disclosure at the outset of a class action lawsuit filed in federal courts and of claims that are aggregated into a federal multi-district litigation (MDL) proceeding. 

Congressman Issa said: “This legislation is an uncomplicated but long-overdue transparency measure. If a third party is financing a class action lawsuit in federal court, it should be declared at the onset of the case. Awareness by all parties will help ensure fair and equal treatment by the justice system, as our system is designed to guarantee.”

In recent years, hedge funds and other commercial investors have provided litigation funding through coverage of attorney’s fees, court costs, expert witnesses and other legal expenses in return for a share of potential settlements or court awards.

Senator Chuck Grassley (IA), Senator John Cornyn (TX), Senator Ben Sasse (NE) and Senator Thom Tillis (NC) of the Senate Judiciary Committee have introduced Senate companion legislation.

Senator Grassley said of his companion legislation with Congressman Issa: “Our bill strikes the appropriate balance in getting certain information out in the open while allowing courts to craft necessary protections.”

Read the full text here.