The United States District Court for the District of New Jersey has announced proposed amendments to its Local Civil Rules, including a new rule – Civ. Rule 7.1.1 – regarding “Disclosure of Third-Party Litigation Funding.”
As we previously observed on this blog earlier this year, the exact dollar amount that third-party investors infuse into U.S. lawsuits each year is unknown, but conservative estimates begin at approximately $2.3 billion. Currently, the District of New Jersey’s Local Civil Rules are silent as to litigation funding, but the District is focused on the importance of understanding the parameters of outside litigation funding and a mechanism for requiring disclosure.
The exact dollar amount that third-party investors infuse in U.S. lawsuits every year is unknown, but conservative estimates begin around $2.3 billion, with agreement that the industry has room to grow. With the ongoing pandemic stretching litigation timelines and straining budgets, the litigation funding industry remains highly active. Despite the importance of litigation funding to all parties involved (lawyers, plaintiffs, and defendants), regulation varies by state, and litigation funders are largely left to self-regulate.
Social media information that reflects a person’s physical condition, activity level, and emotional state is a particularly valuable source of discovery in product liability and personal injury cases. See, e.g., Forman v. Henkin, 30 N.Y.3d 656 (2018). Lawyers must take great care to collect that information ethically.
In a unanimous decision, the Minnesota Supreme Court abolished Minnesota’s common-law prohibition against champerty and maintenance, opening Minnesota to third-party litigation financing. Maslowski v. Prospect Funding Partners LLC, et al., A18-1906, 2020 WL 2893376 (Minn. June 3, 2020).
For the less practiced in Middle English, champerty is “an agreement to divide litigation proceeds between the owner of the litigated claim and a party unrelated to the lawsuit who supports or helps enforce the claim” and maintenance is “improper assistance in prosecuting or defending a lawsuit given to a litigant by someone who has no bona fide interest in the case, meddling in someone else’s litigation.” Black’s Law Dictionary (11th ed. 2019). Today, champerty and maintenance are often associated with third-party litigation financing.