District of New Jersey Proposes New Local Civil Rule Requiring Disclosure of Third-Party Litigation Funding

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.

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Considerations from the ABA’s Best Practices for Litigation Funding

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.

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