The U.S. Court’s Advisory Committee on Civil Rules signaled in its recently released report that litigation finance continues “growing and evolving” and that considering potential rules mandating disclosure of funding arrangements must begin “if at all, by undertaking a careful quest for information that may be hard to come by.” That process will not proceed quickly, and “the topic may be no more ripe for further work now than it was in 2014 or 2016,” when two prior proposals were rebuffed.
The committee delegated initial consideration of the proposal by the U.S. Chamber of Commerce to a subcommittee studying various issues related to multi-district litigation, or MDL. The subcommittee has been tasked with a six- to 12-month project aimed at gathering information on litigation financing and other MDL-related topics. (The committee made its report of the November 2017 meeting public last week; the report confirms what had been previously reported in the press.)
The Chamber’s proposed amendment to Rule 26 of the Federal Rules of Civil Procedure would have required disclosure of “any agreement under which any person, other than an attorney permitted to charge a contingent fee representing a party, has a right to receive compensation that is contingent on, and sourced from, any proceeds of the civil action, by settlement, judgment or otherwise.”
The advisory committee noted that the only “clear” aspect of the proposal is that “it is not designed to regulate third-party lending in any way” and would only mandate disclosure; “the benefits to be gained by disclosure are less clear.” The…