On June 21, 2021, the United States District Court for the District of New Jersey (“USDNJ”) adopted Local Rule 7.1.1, which promotes transparency in third-party litigation funding (“TPLF”). NJCJI and the U.S. Chamber of Commerce’s Institute for Legal Reform (“ILR”) submitted a joint comment to the USDNJ in support of this rule because it will help reduce TPLF’s pernicious effect on fair and efficient disposition of civil litigation.
The new rule requires parties to file a statement, shortly after the commencement or transfer of a matter to the court, containing information about any non-parties funding the litigation. Specifically, the rule mandates disclosure of the identity of the non-party funder; whether the funder’s approval is necessary for litigation decisions or settlement, and the nature of that required approval; and a description of the nature of the funder’s financial interest in the outcome. While the rule does not require production of the actual agreements between non-party funders and parties to the litigation, it does allow parties to seek discovery of the terms of those agreements upon a showing of good cause that the funder has the authority to make material litigation or settlement decisions, the interests of the parties (or class) are not being promoted or protected, or conflicts of interests exists, or such other disclosure is necessary to any issue in the case.
This new rule takes effect immediately and applies to all pending cases in the USDNJ upon its effective date. Parties to such litigation must comply with the rule’s disclosure requirements within 45 days of that date. A copy of Local Rule 7.1.1 can be found here. Please contact NJCJI’s President, Anthony Anastasio, with any questions about Local Rule 7.1.1 or the broader effort to promote transparency in TPLF across the country.