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Senate approves disclosure rules for third‑party litigation financing with exemptions for nonprofits
Summary
Senate Bill 21‑08 requires disclosure of third‑party litigation funders to courts and restricts funder control over litigation strategy; sponsors emphasized foreign‑actor risks and access to proprietary information, while opponents warned about chilling access to justice for small plaintiffs.
Senate Bill 21‑08 (conforming substitute to House Bill 21‑08) passed on third reading after debate about third‑party litigation financing and its potential national‑security and fairness implications. Senator Taylor, the sponsor, said the bill would require disclosure to the court of third‑party funders, prohibit funders from controlling strategy or settlement decisions, cap recoveries, and specifically exclude nonprofits and consumer legal funding like bridge loans.
Floor debate covered concerns that broad application could chill access to justice for small plaintiffs who rely on litigation financing. Senator Campbell asked how the bill would avoid chilling claims brought by individuals or small companies; the sponsor said nonprofits are excluded and that the legislation targets commercial funders and foreign adversary financing that could gain access to proprietary information through discovery.
Senators discussed differences between the Senate and House versions and withdrew a committee amendment before proceeding. After discussion and closing remarks, the clerk recorded the vote and the bill was declared passed.
