A coalition of 124 businesses, such as Amazon, Bayer, The Allstate Corporation and General Motors, submitted a letter to H. Thomas Byron III, Secretary of the Committee on Rules of Practice and Procedure, calling for disclosure requirements of Third-Party Litigation Funding (TPLF) agreements in federal civil cases due to its impact on cases and settlements. 

"We need TPLF disclosure to understand who has control of the case," the coalition explained. They pointed out that when TPLF is involved, it "fundamentally alters the dynamics and has a major impact on whether the dispute can be resolved through settlement." 

Companies, including Bristol Myers Squibb, Pfizer, and Exxon Mobil, find it increasingly difficult to make informed decisions about settlements when third-party funders are influencing litigation behind the scenes, often leading to longer and more expensive legal battles.

On October 10, following the growing calls for reform, a subcommittee chaired by Chief U.S. District Judge R. David Proctor was established to investigate the need for a federal rule on TPLF disclosure. This subcommittee will examine whether significant issues have arisen due to the lack of mandatory disclosure and will consider possible reforms.

Representative Darrell Issa (R-Calif.) introduced legislation in the U.S. House of Representatives on October 4 that would require the disclosure of litigation funding in civil lawsuits filed in federal courts. "We believe that if a third-party investor is financing a lawsuit in federal court, it should be disclosed rather than hidden," Issa remarked.

The coalition concluded by urging the Advisory Committee to establish a uniform rule mandating TPLF disclosure, asserting that "the continued uncertainty and court-endorsed secrecy of non-party funding in our cases will further unfairly skew federal civil litigation."

According to the U.S. Chamber of Commerce Institute for Legal Reform, third-party litigation funding (TPLF) lets hedge funds and financiers invest in lawsuits for a share of the settlement. Originating in Australia, it has spread to Europe, the U.S., and beyond, raising concerns about funders driving litigation without proper disclosure or safeguards.

TPLF has grown into an $18 billion global industry, with 52% of funding directed at U.S. litigation, a report from CRC group said. This raises costs for businesses, as TPLF allows plaintiffs to extend cases and adopt aggressive tactics, leading to higher settlements, jury awards, increased insurance premiums, larger deductibles, and more restrictive coverage.

According to a SwissRE report, the litigation funding market has expanded rapidly, growing by 44% from 2019 to 2022, and is projected to continue at a compound annual growth rate of 8.7% from 2020 to 2028.