SESSION OF 2024
SUPPLEMENTAL NOTE ON HOUSE BILL NO. 2510
As Amended by House Committee on Judiciary
Brief*
HB 2510, as amended, would update the Code of Civil
Procedure to allow a party to a legal proceeding to obtain
discovery of the existence and content of a third-party
agreement (TPA) to pay expenses directly related to the legal
claim and would provide a right to compensation based on
the outcome of the case.
The bill would also provide limitations on discovery of
TPAs, require reporting of TPAs, establish a Judicial Council
Committee to review the use of TPAs, and make technical
changes.
Third-Party Agreement
The bill would define the term “third-party agreement” as
any agreement under which any person, other than a party,
an attorney representing the party, such attorney’s firm, or a
member of the family or household of a party has:
●Agreed to pay expenses directly related to
prosecuting the legal claim; and
●Has a contractual right to receive compensation
that is contingent in any respect on the outcome of
the claim.
The bill would specify the term does not include a TPA in
which the nonparty would receive an amount contingent on
____________________
*Supplemental notes are prepared by the Legislative Research
Department and do not express legislative intent. The supplemental
note and fiscal note for this bill may be accessed on the Internet at
http://www.kslegislature.org the outcome of the case. However, such nonparty could
receive repayment of the amount they contractually agreed to
provide, plus reasonable interest, limited by the bill to an
amount not greater than 11.1 percent of the principal.
Agreement Discovery—Limitations
The bill would allow a party to obtain discovery of the
existence and content of any TPA within certain limitations.
Disclosed information concerning the TPA would not be
admissible as evidence at trial solely because it was
disclosed.
Court Order
The bill would allow a party to make a motion asking that
the court prohibit further inquiry into the existence of a TPA.
Upon a finding by preponderance of the evidence that the
inquiry may cause undue prejudice to the moving party, the
court would be required to prohibit further inquiry.
When making such a finding, the court would be
required to consider:
●The political, ideological, or social nature of the
case;
●The likely balance of litigation resources between
the parties disputing the discovery;
●Whether the inquiry would be proportional to the
needs of the case; and
●Any other relevant information presented by the
parties disputing the discovery.
2- 2510 Nonprofit Corporations
The bill specifically provides that its provisions shall not
be construed as requiring a nonprofit corporation or
association to disclose its members or donors or to require
disclosure of otherwise privileged information.
Disclosure by Certain Parties
Unless the court finds a TPA would be admissible under
the Rules of Evidence and necessary to prove an element of
a claim, the bill would not allow a TPA’s disclosure in any
action brought:
●By or on behalf of the State or any political
subdivision of the State enforcing a law or seeking
to protect against an imminent threat to health or
public safety; or
●Solely in the public interest or on behalf of the
general public if:
○The plaintiff does not seek any relief different
from relief sought for the general public or a
class of which the plaintiff is a member unless
such relief is a claim for attorney fees, costs,
or penalties;
○If the action is successful, would enforce an
important right affecting the public interest
and would confer a significant pecuniary or
nonpecuniary benefit on the general public or
large class of persons; and
○Private enforcement is necessary and places
a disproportionate financial burden on the
plaintiff in relation to their stake in the matter.
3- 2510 Confidentiality of Disclosed Information
When requested by the disclosing party, the court would
be required to issue an order to protect discovery of a TPA
other than to the parties, the parties’ counsel, experts, and
others necessary to the legal claim.
Reporting
On and after July 1, 2024, the bill would require
reporting of any TPA to the Judicial Council (Council) within
45 days after the commencement of an action in any Kansas
court in which such a TPA exists or within 45 days after a TPA
is entered into, whichever is later. The Council would be
required to provide the person who reported the TPA a
document acknowledging receipt of the report.
Any unreported TPA would be void and unenforceable
unless it would not be required to be disclosed under the bill’s
provisions.
Report Confidentiality
TPA reports submitted to the Council would be
considered confidential and not subject to the Kansas Open
Records Act (KORA). This provision would expire on July 1,
2029, unless the Legislature reviews and reenacts this
provision as required under current KORA.
Report Form
The clerk of the Supreme Court would be required to
prescribe a form including the method of reporting a TPA with
a foreign person and any other information the clerk
determines necessary for the Council study described below.
The bill would define the term “foreign person” as:
4- 2510 ●An individual who is not a U.S. citizen or an alien
lawfully admitted for permanent residence in the
United States;
●An unincorporated association where the majority
of the members are not U.S. citizens or aliens
lawfully admitted for permanent residence in the
United States;
●A corporation that is not incorporated in the United
States;
●A government, political subdivision, or political
party of a country other than the United States;
●An entity that is organized under the laws of a
country other than the United States and has
shares or other ownership interest held by a
government or government official from a country
other than the United States; or
●An organization in which any person or entity as
described above holds a controlling or majority
interest, or in which the holdings of any such
persons or entities would constitute a controlling or
majority interest.
Judicial Council Committee
The bill would require the Council to establish a Judicial
Council Committee (Committee) to study the issue of TPAs
on or before July 1, 2027. The Committee would be required
to review all required TPA reports and any other related
information to TPAs the Committee deems necessary.
Between September 1, 2028, and December 1, 2028,
the Council would be required to report to the Chief Justice of
the Supreme Court, Attorney General, House Committee on
Judiciary, and Senate Committee on Judiciary on the topic of
5- 2510 TPAs in Kansas and in other states, and make
recommendations on the use of TPAs in Kansas.
Severability — Sunset Provision
The bill’s provisions related to TPA disclosure, reporting,
and the Judicial Council Committee would be severable
under the bill and would expire on July 1, 2029.
Technical Amendments
The bill would make technical amendments to
implement the provisions of the bill and to ensure consistency
in statutory phrasing.
Background
The bill was introduced by the House Committee on
Judiciary at the request of a representative of the Kansas
Chamber of Commerce.
House Committee on Judiciary
In the House Committee hearing on January 31 and
February 1, 2024, proponent testimony was provided by
representatives of the Alliance for Responsible Consumer
Legal Funding, the Kansas Chamber of Commerce, and the
U.S. Chamber of Commerce Institute for Legal Reform. The
proponents generally stated the bill would create
transparency by allowing parties to discover persons and
entities with a financial stake in a court proceeding and allow
defendants to better determine whether they should settle a
claim. Additionally, the proponents stated the legislation is in
response to institutional investors looking to fund lawsuits in
expectation of getting a return on that funding.
6- 2510 Opponent testimony was provided by two
representatives of International Legal Finance Association
and a representative of the Kansas Trial Lawyers Association.
The opponents generally stated concerns with disclosure,
noting that the information would be provided under current
law, if relevant, and expressed a desire for legal claims to be
brought forward based on merit rather than whether a party is
well-funded.
Neutral testimony was provided by a representative of
the Kansas Attorney General, who generally stated the bill
would no longer allow anonymous donations to public law
firms, which have been protected by the U.S. Supreme Court.
The representative noted that disclosure is already allowed
under the Code of Civil Procedure if the disclosure is relevant
and proportional to the needs of the case. The representative
also stated the Attorney General is concerned about national
security risks with third-party funding, and concerned that
disclosure information would be used for reasons beyond the
court proceedings.
Written-only proponent testimony was provided by
representatives of the American Property Casualty Insurance
Company, the Kansas Agribusiness Retailers Association and
Kansas Grain and Feed Association, the Kansas Association
of Defense Counsel, the Kansas Association of Insurance
Agents, the Kansas Association of Property and Casualty
Insurance, the Kansas Medical Society, and the National
Association of Mutual Insurance Companies, generally stating
the bill would promote additional transparency and help
mitigate litigation costs.
Written-only opponent testimony was provided by a
representative of the Kansas Bar Association, stating the bill
is overly broad and may result in fewer opportunities for
meritorious claims to be heard by a court.
On February 21, 2024, the bill was withdrawn from the
House Committee on Judiciary and referred to the House
Committee on Appropriations. On February 22, 2024, the bill
7- 2510 was withdrawn from the House Committee on Appropriations
and rereferred to the House Committee on Judiciary.
On March 7, 2024, the House Committee amended the
bill to include limitations on discovery of TPAs, reporting of
TPAs, creating a Judicial Council Committee, and adding
definitions related to TPAs.
Fiscal Information
According to the fiscal note prepared by the Division of
the Budget on the bill, as introduced, the Office of Judicial
Administration indicates enactment of the bill would have
negligible effect on the operations of the Judicial Branch.
Litigation funding; third parties; evidence; civil procedure
8- 2510