Design Highlights
- Senators Kennedy and Manchin introduced bipartisan legislation to regulate third-party litigation funding and enhance transparency in U.S. courts.
- The proposed law aims to ban foreign government funding of lawsuits, addressing national security concerns linked to foreign influence.
- TPLF has allowed foreign entities, especially from China, to entangle U.S. companies in costly and resource-draining legal battles.
- Public opinion shows strong support for mandatory disclosure of litigation funding sources and opposition to foreign investments in U.S. lawsuits.
- Recent hearings by the House Judiciary Committee spotlighted conflicts of interest and the economic inefficiencies caused by foreign litigation funding.
As lawmakers scramble to address the murky waters of litigation funding, it seems that foreign interests might have finally pushed the right buttons. Senators John Kennedy and Joe Manchin—yes, you read that right, a Republican and a Democrat—teamed up to introduce bipartisan legislation in September 2023. Their target? Foreign involvement in U.S. litigation. That’s right, folks. They’re not just waving flags; they’re waving legal documents.
The proposed bill demands that all sources of third-party litigation funding (TPLF) be disclosed, and it puts a big ol’ “no entry” sign up for foreign governments looking to fund lawsuits in American courts.
The bill calls for total transparency in third-party litigation funding and bans foreign governments from meddling in U.S. lawsuits.
The stakes are high. Foreign adversaries are playing chess while American companies are stuck in a game of checkers. Take China, for instance. Their sovereign wealth fund is reportedly lurking in the shadows of military tech litigation, ready to pounce. It’s like a scene from a spy movie, except this is real life.
TPLF provides a sneaky way for foreign entities to drag major U.S. companies into lengthy legal battles, wasting their time and resources. The longer these companies are caught up in legal limbo, the more strategic advantages competitors gain. It’s a messy situation, and the lack of transparency in the TPLF industry only adds to the confusion, making it harder to track the flow of foreign money into American courts. In 2022, $3.2 billion was deployed in the U.S. market for TPLF financing, underscoring its growing significance, with an estimated $15.2 billion in commercial litigation investments in the U.S. overall. Much like how landlords require proof of coverage from tenants to protect their interests, disclosure requirements aim to reveal who’s bankrolling these lawsuits.
Congress isn’t just sitting back and watching. The House Judiciary Committee held hearings in June 2025 to dissect the impact of litigation funding by foreign players. They even labeled a September 2023 hearing “Unsuitable Litigation.” It’s like the title of a bad reality show but with real consequences.
Testimonies revealed conflicts of interest that make you question who’s really in charge—the lawyers or their clients? Meanwhile, states are jumping on the bandwagon, doubling the number of laws requiring litigation funding disclosure in just one year. But hold on—this has created a patchwork of rules that would confuse even the most seasoned lawyer.
Public opinion is a mixed bag, but there’s a clear consensus. A whopping 69 percent of voters want mandatory disclosure of third-party funding. And when it comes to foreign governments investing in U.S. lawsuits against American companies? Well, 82 percent are firmly against that idea. It’s a bipartisan agreement that screams national security implications.
