Requires disclosure of third-party litigation funding agreements and establishes certain responsibilities for litigation funders.
Impact
The bill's enactment would significantly alter the landscape of civil litigation by ensuring that all parties involved are aware of and can scrutinize the financial influences that support ongoing civil cases. It establishes a fiduciary duty for litigation funders towards the funded parties, meaning that funders must act in the best interest of those receiving their support. Additionally, the legislation holds funders jointly liable for any costs or monetary sanctions imposed on the funded party, thereby ensuring financial accountability from litigation funders. This could lead to a more equitable environment for litigants who rely on third-party funding to pursue their legal claims.
Summary
A5566 is a proposed legislation introduced in New Jersey that mandates the disclosure of third-party litigation funding agreements and delineates the responsibilities of litigation funders. Under this legislation, any party or their attorney involved in a civil action is required to disclose any existing funding agreements to the court and all involved parties either at the time of filing the initial pleading or when such an agreement is made, should it occur post-filing. This requirement aims to promote transparency in civil litigation financing and to protect the interests of the parties receiving funding.
Contention
Notably, the bill prohibits litigation funders from engaging in conduct that interferes with the funded party's civil action, such as influencing legal decisions, providing legal advice, or securing specific remedies without the party's consent. By limiting the financial influence of third parties, this legislation addresses concerns about predatory lending practices within legal financing. However, it could face opposition from entities within the litigation funding sector that may see these regulatory measures as burdensome and overly restrictive to the financing models they operate under.
Substitute for SB 54 by Committee on Judiciary - Limiting discovery and disclosure of third-party litigation funding agreements and requiring reporting of such agreements to courts.