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Social Inflation Insight

Delaware Judge Shines Light on Courtroom Investors 

Good morning,
 
This week’s Social Inflation Insight concerns a recent order by a U.S. District Court judge in Delaware intended to disclose the influence of third-party litigation funding (TPLF) in his court.
 
Chief Judge Colm F. Connolly has introduced new rules for cases before him requiring parties involved in court proceedings to disclose any financial support from third-party funders. Judge Connolly’s orders only apply to his courtroom, but the district he presides over is significant. More than half of publicly traded companies in America are incorporated within Delaware’s borders, and their laws often govern contracts between businesses. 

With the new standing order, we will see more transparency in many critical upcoming cases coming before Judge Connolly. It also might influence other judges to follow suit, creating an even more transparent legal process overall. These small strides are adding up in the fight to prioritize the disclosure of third-party litigation financing. The need for transparency in TPLF agreements has been undeniable as more and more states pass laws requiring disclosure of these types of contracts. 

In 2017, a new rule went into effect within the Northern District of California, which prohibited anyone not listed as an intended party from participating or benefiting from any decision made during litigation proceedings related to their case file. This was soon followed by Wisconsin's 2018 law requiring all participants to receive notice about how they will be compensated if found liable at trial. 

In 2019, West Virginia enacted a law governing the use of third-party funders in the state’s courtrooms.  And just last year, the U.S. District Court for the District of New Jersey proposed amending its rules to require TPLF disclosures. 

At Triple-I we will continue to monitor these important developments around third-party litigation funding as disclosure is imperative to ensuring transparency in courtrooms nationwide.

The following states have considered legislation to address third-party litigation funding: Iowa, Illinois, Kansas, Kentucky, Missouri, New Jersey, New York, Rhode Island, Wisconsin, and West Virginia.

Triple-I will periodically share important updates around national efforts to tackle issues contributing to social inflation. Visit iii.org/socialinflation for more resources and information.
To learn more, visit iii.org/socialinflation
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