The International Legal Finance Association (ILFA) submitted a letter last week to the Judicial Conference of the United States, highlighting the benefits of third-party litigation funding, and arguing that mandatory disclosure rules would have a disproportionately negative impact on small businesses and vulnerable Americans.
Drawing on arguments made by Certum's William Marra in a forthcoming Southern California Law Review article, ILFA explained that the practice of third parties funding the fees and costs of litigation is a well-established and indeed celebrated aspect of our legal system. Examples of third-party funding include contingency fees, bank loans, equity investments in companies, impact litigation, and liability insurance.
The ILFA letter notes that efforts to regulate "TPLF" are in fact aimed at only a narrow slice of third-party funding—specifically, non-recourse commercial funding provided in exchange for a share of monetary recovery. As the letter explains:
That narrow targeting is not explained by any principled distinction. Instead, it is designed to create a system that burdens small businesses and individual claimants—those least able to access traditional capital markets to finance legal claims—while leaving untouched the financing practices of wealthy companies and institutional actors that have far greater resources and strategic influence over litigation.
Put simply, the proposals before the Committee would impose disclosure rules not on all forms of litigation finance, but on the one form most likely to level the playing field for less well-resourced litigants. That asymmetry reveals the true dynamic at work: selective regulation risks suppressing the only type of finance that empowers smaller parties, while exempting the far more entrenched forms of third-party influence that pervade American litigation.
The letter was submitted in advance of the Civil Rules Committee meeting scheduled for Friday, October 24, 2025, in Washington, D.C. The Committee will consider whether to impose a mandatory disclosure rule on third-party litigation funders. In October 2024, the Committee formed a subcommittee to study whether disclosure of funding is warranted.
The full text of ILFA's letter is available here.
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