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Committee considers narrower disclosure rules for third‑party litigation funding after multi‑year talks
Summary
Senate Bill 54 would require parties to disclose third‑party litigation funding agreements to the court (in camera) and to opposing parties; proponents say the compromise balances transparency and proprietary concerns; opponents filed written testimony.
The House Committee on Judiciary on March 5 took testimony on Senate Bill 54, a measure that would require disclosure of third‑party litigation funding agreements to the court for in‑camera review and limited disclosure to opposing parties and would instruct the Judicial Council to study aggregated, non‑identifying information about such agreements.
Jason Thompson of the Revisor's Office described the bill as an amendment to KSA 60-226, the civil discovery statute. "If you have one of these agreements you're required to notify the court and the court will review it in camera," he said, summarizing the in‑camera review and a subsequent requirement that a party deliver a sworn statement to the opposing parties describing the arrangement and specific enumerated items in the bill brief.
Supporters framed Senate Bill 54 as a transparency measure, not a ban. Eric Stafford, vice president of government affairs for the Kansas Chamber, said the bill reflects a negotiated compromise reached with opponents after several years of debate and that disclosure helps opposing counsel and the court evaluate potential conflicts or nonparty control over litigation decisions.
"We are not trying to ban them," Stafford said. "Out of fairness for the judiciary, disclosure is good. If there is somebody that has a financial interest in the outcome in the case, ... the defense needs to know that to make informed decisions about negotiation and trial strategy."
The bill defines third‑party litigation funding agreements as contracts where a person other than a party, an attorney, the attorney's firm, or a family/household member agrees to pay litigation‑related expenses and has a contingent right to receive compensation based on the outcome; minor exceptions for mere loans with interest (defined in the bill as not greater than 11.1%) are included.
Proponents said the current text includes protections for nonprofits and donors: the bill would not be construed to require a nonprofit corporation or association to disclose its members or donors. The bill also contains limitations on admissibility and redisclosure of funding information and a reporting pathway for courts to submit aggregated information for study by the Judicial Council.
Opponents: The Kansas Trial Lawyers Association and the Kansas Bar Association filed written opposition; proponents said they negotiated with opponents and the International Litigation Funding Association to narrow prior proposals. Committee members indicated they expect technical amendments when the bill is worked.
No vote: Committee closed the hearing after oral and written testimony. Members acknowledged the multi‑year negotiations that produced the compromise language and signaled they would consider amendments recommended in written submissions.
Ending: Supporters described the bill as a transparency tool intended to give judges and opposing counsel relevant information without broadly exposing proprietary details; critics asked for more protections for proprietary funding information and clarified access rules.
