Senator Grassley Adds to Fight for Federal TPLF Disclosure

Those lobbying for changes in court rules to require disclosure of third-party litigation funding have a new ally – Sen. Chuck Grassley. Grassley, R-Iowa, the chairman of the U.S. Senate’s Judiciary Committee, submitted a letter to the Advisory Committee on Civil Rules to encourage it to amend federal rules of procedure and “increase public disclosure of third party funding in litigation.” Grassley said funders “often prioritize using the courts for monetary return rather than for obtaining justice for the parties involved in the cases.” The practice also has national security implications. He said foreign investors get involved in TPLF to learn trade secrets during the discovery process. Furthermore, companies tied up in long court battles are using funds on lawyers rather than on research and product development, Grassley wrote. “In addition to providing this data so the practice could be evaluated fairly, required disclosure would help ensure fairness in the courts,” and discourage those with “nefarious intent,” Grassley said. “If a third party funding arrangement cannot stand up to public scrutiny, it likely should not occur.” Grassley’s supports comes as little surprise. He is the sponsor of the Litigation Funding Transparency Act of 2026, which would require TPLF disclosure in multidistrict litigation, class actions, or other large cases. The Oct. 21 letter from the senator was submitted on the day of the advisory committee’s last meeting. Minutes of this meeting were not yet available but past committee gatherings of judges, lawyers, and professors indicate the topic of TPLF has come up for discussion quite often over many years. Members have distinguished the difference between evaluating TPLF’s ethicality and establishing better case management standards. The focus should be on the latter, members have said. According to comments in the minutes from an April meeting, there appears to be a fair amount of concern that any rule could account for “all of the nuances and varying circumstances of TPLF while also anticipating how rapidly the industry is changing.” In addition, any rule would need to apply to issues raised in different kinds of cases, which may vary in patent litigation versus a mass tort, for instance. The insurance industry certainly has its opinions on the matter of TPLF. The practice of investing in lawsuits in exchange for a percentage of a settlement or judgment has increased overall claims costs due to escalating litigation costs. The industry has routinely supported federal and state efforts to curtail TPLF. Related: One Battle After Another: What TPLF Victory in One State Means for Others Groups Push for Federal Court Rule to Disclose Litigation Funding APCIA Backs Federal Bill to Require Litigation Funding Disclosure Louisiana Dept. of Insurance Enters Partnership to Fight Litigation Funding Florida Lawmakers Ready for Another Shot at Litigation Funding Limits Can a More Unified Front Be Formed Against Legal System Abuse? Insurers and its counsels were joined by others from varying industries in sending a September letter to the Advisory Committee on Civil Rules, endorsing a proposed rule endorses a rule the Lawyers for Civil Justice (LCJ) and the U.S. Chamber Institute for Legal Reform submitted to the committee to require the disclose of any funder with financial interest in the litigation, and the funding agreement. Related: Insurance Companies Join Letter to Push TPLF Disclosure in Federal Courts “Given the [rules’] emphasis on transparency about financial interests in litigation, the absence of a TPLF disclosure requirement is inexplicable,” LCJ wrote.