TRENTON, N.J. (Legal Newsline) – Plaintiffs lawyers in New Jersey will have to disclose their financial support when they pursue litigation in federal courts there, thanks to a new rule.
It’s good news for defendants who want to know the identities of companies they say exert a measure of control over lawsuits. Litigation funders front money to plaintiffs lawyers in exchange for a percentage of the recovery, which can complicate whether a client’s case settles or makes it to trial.
Defendants forced to show how much insurance companies are covering their liability have long contended that plaintiffs who are taking money from third parties be required to turn over that information.
On June 21, the chief judge for the U.S. District Court for the District of New Jersey, Freda Wolfson, signed a rule that requires plaintiffs to, within 30 days of filing their case or having it transferred to New Jersey federal courts, reveal:
-The identity of the funder –its name, address and place of formation;
-Whether the funder’s approval is necessary for litigation or settlement decisions and if so, what is the nature of the terms relating to that approval; and
-A brief description of the nature of the financial interest.
Following that, parties may seek additional discovery of the terms of litigation-funding agreements.
Similar rules have been passed for federal courts in the Northern District of California and state courts in Wisconsin.