General counsel and senior litigators from 30 companies have come out against the litigation funding industry, asking the Advisory Committee on Civil Rules to mandate disclosure of all funding agreements in civil actions.
An LFJ Conversation with Michael Kelley, Partner, Parker Poe
General counsel and senior litigators from 30 companies have come out against the litigation funding industry, asking the Advisory Committee on Civil Rules to mandate disclosure of all funding agreements in civil actions.
30 corporations have signed a letter which was sent to the Secretary for the Committee on Rules of Practice and Procedure. The letter proposes an amendment to the Federal Rules on Civil Procedure 26(a)(1)(A) “to require in civil actions the disclosure of agreements giving a non-party or non-counsel the contingent right to receive compensation from proceeds of the litigation.”
The signatories argue that when a funder backs a lawsuit, it effectively becomes a ‘real party’ in the case, and that both defendants and the court have a right to know who has a stake in the lawsuit, and if ethical means of achieving success are being utilized.
The signatories asset that they are not attempting to regulate litigation funding, and that “no harm would flow from requiring such basic transparency about who has invested in a lawsuit and the terms of that investment, at least none that could not be protected by the court, as the proposal contemplates.”
In the letter’s final paragraph, the signatories even take a swipe at industry claims that the broader business community has been adopting litigation finance. The letter states: “Finally, we note that some litigation funders have contended that major companies are generally indifferent or opposed to such a disclosure requirement because corporate use of TPLF is allegedly widespread. No evidence has been proffered to support that assertion. Nor is it consistent with our experience.”
Below is a list of companies who signed the letter:
- Allstate
- AT&T
- Bayer U.S.
- BP America Inc.
- Charles Schwab
- Chevron
- Comcast Corporation
- CVS Health
- Eli Lily and Company
- Ford Motor Company
- General Electric
- GlaxoSmithKline LLC
- Home Depot
- Honeywell
- ITT Inc.
- Johnson & Johnson
- Liberty Mutual Insurance
- MassMututal
- Merck & Co., Inc.
- Microsoft
- Phillips66
- RiverStone Group
- RPM International, Inc.
- Shell Oil Company
- State Farm Mutual Automobile Insurance Company
- Verizon Wireless
- Westfield
- Zurich North America
