This document, submitted by Lawyers for Civil Justice and the U.S. Chamber of Commerce Institute for Legal Reform, proposes amending Federal Rule of Civil Procedure 16(c)(2) to prompt judges to consider inquiring about third-party litigation funding (TPLF) during pretrial conferences. The authors argue that TPLF arrangements, where non-parties such as investors or funds have a direct financial stake in the outcome of litigation, are increasingly common yet often undisclosed, creating potential conflicts of interest and transparency issues in federal civil cases.
The suggestion emphasizes that current rules do not require disclosure of TPLF, leaving courts unaware of non-party financial interests that may influence case outcomes, settlement negotiations, or judicial recusal decisions. By adding a prompt about TPLF to Rule 16(c)(2), judges would be better equipped to identify and address these interests, ensure appropriate parties are involved in settlement discussions, and protect the integrity of class actions and discovery processes.
Ultimately, the document contends that a simple amendment to Rule 16(c)(2) would enhance judicial oversight, promote transparency, and support a culture of compliance within the federal judiciary, all while preserving judicial discretion to address TPLF issues on a case-by-case basis. The authors believe this change would benefit courts, litigants, and the broader justice system by making non-party financial interests more visible and manageable.
