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Bill

S 4374

Requires disclosure of third-party litigation funding agreements and establishes certain responsibilities for litigation funders.

2024-2025 Regular Session Introduced by Joe Lagana and 2 co-sponsors

New Jersey law would require litigation parties to disclose third-party funding agreements to courts and opponents, imposing regulatory duties on litigation finance companies.

Reported out of Senate Committee with Amendments, 2nd Reading
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Bill Summary · S 4374

Legislative bill overview

S 4374 requires parties involved in litigation to disclose any third-party litigation funding agreements to opposing parties and the court. The bill establishes regulatory responsibilities for litigation funders, including obligations regarding case management and potential conflicts of interest. This addresses the growing practice of litigation finance companies funding lawsuits in exchange for a percentage of settlement or judgment proceeds.

Why is this important

Third-party litigation funding has grown substantially, raising concerns about whether external financial interests might influence case strategy or encourage frivolous claims. Transparency requirements allow opposing parties to understand financial incentives at play and help courts assess potential conflicts. This directly affects civil litigation costs, settlement negotiations, and access to justice for plaintiffs who might otherwise lack resources.

Potential points of contention

  • Business impact: Litigation funders argue disclosure requirements could reduce their ability to operate and ultimately limit access to justice for plaintiffs who cannot self-fund litigation
  • Litigation strategy: Disclosing funder involvement and profit arrangements could disadvantage plaintiffs by revealing financial motivations to opposing counsel during negotiations
  • Regulatory scope: Ambiguity about which "responsibilities" funders must assume—whether they gain attorney-like duties, fiduciary obligations, or liability exposure remains unclear from the summary

Compiled from official sources — confirm details with the bill’s official record.

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