SESSION OF 2025
SUPPLEMENTAL NOTE ON SUBSTITUTE FOR SENATE
BILL NO. 54
As Amended by House Committee on Judiciary
Brief*
Sub. for SB 54, as amended, would amend the Kansas
Code of Civil Procedure to require the disclosure of third-
party litigation funding agreements (TPLF agreements or
agreements).
Third Party Litigation Funding Agreements
The bill would define the term “third-party litigation
funding agreement” as an 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 an
agreement that does not afford the nonparty agreeing to pay
legal expenses any profit from the legal claim beyond
repayment of the amount the nonparty has contractually
agreed to provide, plus reasonable interest, limited by the bill
to an amount not greater than 11.1 percent of the principal.
____________________
*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
https://klrd.gov/ Disclosure
The bill would require a party to provide the TPLF
agreement to the court for in camera review, and unless
otherwise stipulated by the parties or ordered by the court,
deliver a sworn statement disclosing certain facts related to
the agreement within 30 days after commencement of legal
action or 30 days after the execution of the agreement,
whichever is later. [Note: “In camera” is a legal term that
means in private.]
Facts required to be disclosed by the bill would include:
●The identity of all contracting parties to the
agreement;
●Whether the agreement grants a third-party funder
control or approval rights with respect to litigation
or settlement decisions or otherwise has the
potential to create conflicts of interest between the
third-party funder and the party;
●Whether the agreement grants a third-parry funder
the right to receive materials designated as
confidential in the action;
●The existence of any known relationship between a
third-party funder and the adverse party, adverse
party’s counsel, or the court;
●A description of the nature of the financial interest,
including whether such interest is in whole or in
part recourse or non-recourse;
●Whether any foreign person from a foreign county
of concern (defined by the bill) is providing funding,
directly or indirectly, for the agreement, and if so,
the name, address, and country of incorporation or
registration of the foreign person.
2- 54 Limitations on Discovery of Third Party Litigation Funding
Agreements
The bill would provide the following limitations on the
discovery of TPLF agreements:
●Disclosed information concerning an agreement
would not be admissible as evidence at trial solely
because it was disclosed;
●A nonprofit corporation or association would not be
required to disclose its members or donors in order
to comply with the provisions of the bill; and
●Nothing in the bill could be construed to modify the
applicability of the Kansas Rules of Civil Procedure
or Kansas Rules of Evidence, except as provided
in provisions related to the disclosure of
agreements.
Definitions
The bill would define the term “foreign country of
concern” as any foreign adversary as defined by the U.S.
Secretary of Commerce as in effect on July 1, 2025, and any
organization that is designated as a foreign terrorist
organization as of July 1, 2025, by the U.S. Secretary of
State.
The bill would define the term “foreign person” as:
●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;
3- 54 ●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.
Severability
The bill’s provisions related to TPLF disclosure would be
severable, ensuring any court decision holding these
provisions invalid or unconstitutional would not affect the
validity and enforceability of provisions that may be given
effect notwithstanding the invalidity.
Background
The bill was introduced by the Senate Committee on
Judiciary at the request of the Kansas Chamber.
Senate Committee on Judiciary
In the Senate Committee hearing, proponent testimony
was provided by representatives of the Hinkle Law Firm,
Kansas Association of Insurance Agents, Kansas Chamber,
Kansas Medical Society and Kansas Medical Mutual
Insurance Company, and the National Federation of
4- 54 Independent Business. The proponents generally stated the
bill would enhance 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.
Written-only proponent testimony was provided by
representatives of the American Property Casualty Insurance
Association, Kansas Association of Defense Counsel, Kansas
Association of Property and Casualty Insurance Companies,
and National Association of Mutual Insurance Companies.
Opponent testimony was provided by representatives of
the International Legal Finance Association and Parabellum
Capital. The opponents generally stated concerns with
requiring disclosure in all cases, noting that information
regarding funding agreements could be provided under
current law, if relevant.
Written-only opponent testimony was provided by
representatives of the Kansas Bar Association and the
Kansas Trial Lawyers Association.
As introduced, the bill would have allowed a party to
obtain discovery of the existence and content of any third-
party agreement. The Senate Committee adopted a
substitute bill incorporating provisions requiring delivery of a
sworn statement disclosing certain facts related to any third-
party litigation funding agreement to all parties, and
disclosure of such agreement to the court for in camera
review within 30 days. The substitute bill also incorporates
provisions modifying the Judicial Council’s required reporting
of third-party litigation funding agreements and adds
references to “foreign countries of concern.”
House Committee on Judiciary
In the House Committee hearing, proponent testimony
was provided by a representative of the Kansas Chamber,
5- 54 who stated the bill would enhance 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. The conferee
also suggested an amendment to remove the reporting
requirements and related Kansas Judicial Council report
requirement.
Written-only proponent testimony was provided by
representatives of the Kansas Agribusiness Retailers
Association and Kansas Grain & Feed Association, Kansas
Association of Defense Counsel, Kansas Association of
Insurance Agents, Kansas Association of Property & Casualty
Insurance Companies, Kansas Medical Society, Medical
Professional Liability Association, National Federation of
Independent Businesses, and National Insurance Crime
Bureau.
Written-only opponent testimony was provided by
representatives of the Kansas Bar Association and Kansas
Trial Lawyers Association.
The House Committee amended the bill to remove
provisions related to required reports to the Kansas Judicial
Council and a required report on the topic of third party
litigation funding agreements by the Council, as suggested by
the Chamber.
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 could increase
expenditures for the Judicial Branch because the bill requires
additional findings and items for the court to consider in
certain cases. In addition, the bill requires that the appellate
court clerk create a reporting form. However, the Office states
that a fiscal effect cannot be determined until the Judicial
6- 54 Branch has had an opportunity to operate under the
provisions of the bill.
The Judicial Council states that it would need to
establish an advisory committee by FY 2029 to study third-
party agreements. Approximately six meetings would be
necessary to conduct the initial study to comply with the
provisions of the bill, with an additional three meetings in FY
2029 and three meetings in FY 2030. Beginning in FY 2031,
the Council would need to hold two meetings per year to
report findings to the appropriate entities. The Council states
the cost per meeting would be $1,575 for reimbursement of
travel expenses and subsistence payments. The Council
states it could not fund expenditures associated with the
provisions of the bill within existing resources.
Any fiscal effect associated with enactment of the bill is
not reflected in The FY 2026 Governor’s Budget Report.
Code of Civil Procedure; third-party litigation financing; disclosure
7- 54