Federal Rules Committee Recommends No Immediate Action For Third-Party Funding Disclosure Rulemaking

Third-Party Litigation Funding (‘TPLF’ or ‘third-party funding’) is an emerging practice impacting insurers, attorneys, and policymakers. In general, TPLF involves the non-recourse funding of a claim by a non-party for a share in the proceeds if the claim is successful.[1]

As more fully discussed in the author’s recent TPLF Report, third-party funding is presenting several different issues.

One such question of much interest and debate presently is: Should the Federal Civil Rules of Procedure be amended to require plaintiffs to disclose TPLF agreements to defendants?

On October 5, 2021, the Federal Advisory Committee on Civil Rules (Advisory Committee or Committee)[2] revisited this question again but did not recommend any immediate action toward formal TPLF disclosure rulemaking.[3]

In reaching this decision, the Committee raised several issues and questions which, from their view, continue to present challenges in developing TPLF rulemaking at this time. The Committee’s decision will likely disappoint those who have been advocating for a TPLF disclosure requirement over the past several years.