On February 6, 2024, the New Jersey Supreme Court’s Civil Practice Committee issued its biennial report, in which it declined to adopt the New Jersey Civil Justice Institute's (NJCJI) proposal for disclosure of third-party litigation funding (TPLF) in civil litigation.
The Committee is responsible for considering and recommending amendments to New Jersey’s civil practice rules. In October 2021, NJCJI submitted a proposal that included a rule requiring disclosure of TPLF arrangements. Generally, TPLF involves an agreement where a third party—other than a party’s attorney working under a contingency-fee agreement—has a financial interest in the outcome of a civil case.
TPLF has increased significantly in recent years, leading to certain types of civil litigation, such as auto accident cases, mass torts, and consumer class actions becoming increasingly "financialized," with outside money influencing case selection and disposition. These financial arrangements are currently unregulated at the state level, resulting in a lack of transparency.
Without transparency, judges and parties to litigation lack necessary information to determine whether there are conflicts of interest or improper influence by funders on litigation strategy or settlement decisions. These ethical concerns were the substantive basis of NJCJI’s TPLF rule proposal.
