Louisiana Court Order Expands Push for Transparency on Litigation Funding

The US District Court for the Western District of Louisiana has introduced a new rule requiring parties appearing before it to disclose details of third-party litigation financing, adding to a small but growing patchwork of transparency requirements in US federal courts.

 

Under a new standing order, parties must disclose the name and address of all litigation funders backing their cases.

 

Third-party litigation funders provide financing in return for a share of any eventual settlement or judgment.

 

The Louisiana federal court's order does not require parties to disclose their funding agreements in full. Instead, they must provide a brief description of the arrangement and state whether a funder has any right to approve or influence litigation decisions, including settlement decisions.

 

Parties have 14 days to comply with the disclosure requirement after entering a case or signing a litigation funding agreement.

 

Dai Wai Chin Feman, the US chapter chair for the International Legal Finance Association, a trade group representing litigation funders, said the new rule was limited and would not require parties to disclose sensitive information that defendants might seek in the name of transparency.

 

The Louisiana order is the latest in a growing number of federal court orders and state laws requiring disclosure of third-party litigation financing arrangements.

 

Republican lawmakers have introduced bills in the US House of Representatives and Senate that would require nationwide disclosure of litigation financing agreements. However, those proposals have so far failed to gain traction in Congress and face opposition from Democratic lawmakers and conservative groups.

 

In October 2024, a federal judicial rule-making panel said it would examine whether a nationwide requirement for disclosure of third-party litigation funding in lawsuits is necessary.

 

The debate reflects growing scrutiny of the litigation finance industry, in which outside investors fund lawsuits in exchange for a share of any proceeds. Supporters say such financing can improve access to justice, while critics argue that greater transparency is needed to identify financial interests that may influence litigation and settlement decisions.