New Legislation Requires Disclosure of Lawsuit Financing Sources

March 28, 2025 - 03:32

In a significant move, the House of Representatives has passed a Senate bill aimed at increasing transparency in third-party litigation financing. This new legislation mandates that juries be informed about the sources of funding behind lawsuits, a measure that proponents argue will enhance the fairness of the judicial process.

Third-party litigation financing has become a growing industry, where external investors fund lawsuits in exchange for a portion of any potential settlement or award. Critics of this practice have raised concerns about its impact on the legal system, suggesting that it can lead to inflated claims and prolong litigation unnecessarily. By requiring disclosure of financing sources, the new law seeks to mitigate these issues and ensure that juries can consider potential biases that may arise from external funding.

Supporters of the bill believe that this increased transparency will protect the integrity of the legal system and allow juries to make more informed decisions. The legislation now awaits approval from the President before it can be enacted into law.