Colorado enacts law imposing transparency on foreign litigation funding agreements

Colorado's House Bill 1329 aims to enhance transparency and accountability in third-party litigation funding by imposing strict regulations on foreign funders. Introduced on April 15, 2025, the bill seeks to address growing concerns over the influence of foreign entities in the state's legal system, particularly regarding the potential for unfair or deceptive practices.

The key provision of the bill declares any litigation financing agreement with a foreign third-party funder void if the funder fails to meet specific activity and disclosure requirements. This move is designed to protect Colorado residents from potential exploitation and ensure that all parties involved in civil actions are operating under clear and fair guidelines. The bill empowers the Colorado Attorney General to take legal action against non-compliant funders, which may include imposing fines, barring them from operating in the state, or applying other sanctions deemed necessary.

Debate surrounding House Bill 1329 has highlighted concerns about the implications of foreign influence in legal proceedings. Proponents argue that the bill is essential for safeguarding the integrity of Colorado's judicial system and protecting consumers from predatory practices. Critics, however, warn that the bill could deter legitimate foreign investment in the state's legal processes, potentially limiting access to justice for individuals who rely on litigation funding to pursue their claims.

The economic implications of this legislation could be significant. By regulating foreign funders, Colorado aims to create a more transparent legal environment that could foster trust among residents and businesses alike. However, the potential for reduced funding options may also raise concerns about access to justice for those who cannot afford legal representation.

As House Bill 1329 moves through the legislative process, its outcomes will be closely monitored by legal experts and stakeholders. The bill's passage could set a precedent for how states regulate third-party litigation funding, influencing similar legislative efforts across the country. With the Attorney General's enforcement powers at stake, the bill represents a critical step toward ensuring that Colorado's legal landscape remains fair and equitable for all its residents.