On February 6, 2024, the New Jersey Supreme Court’s Civil Practice Committee (“Committee”) issued its biennial report (“Committee Report”), attached here, through which it declined to adopt NJCJI’s proposal for disclosure of third-party litigation funding (“TPLF”) in civil litigation. See Committee Report at p. 111.
By way of background, the Committee is responsible for considering and recommending amendments to New Jersey’s civil practice rules. In October 2021, NJCJI submitted a proposal to the Committee that included, among other things, a proposed rule requiring disclosure of TPLF arrangements. Generally, TPLF involves an agreement through which a third party—other than a party’s attorney working under a contingency-fee agreement—has a financial interest in the outcome of a civil case. TPLF has increased exponentially in recent years, and as a result, certain types of civil litigation, such as auto accident cases, mass torts and consumer class actions, are becoming increasingly “financialized,” with outside money having an outsized influence on case selection and disposition. Critically, these financial arrangements are currently unregulated at the state level resulting in, among other things, a lack of transparency. Without transparency, judges and parties to litigation lack the necessary information to determine whether there are conflicts of interest, improper influence by funders on litigation strategy or settlement decisions, or other ethical concerns with TPLF arrangements. These important ethical concerns were the substantive basis of NJCJI’s TPLF rule proposal.
The Committee’s written response to NJCJI’s TPLF rule proposal is vague. Indeed, the Committee did not specifically address any of the ethical concerns NJCJI raised in its most recent correspondence in support of the proposal, a copy of which can be found here. Rather, it appears the Committee was generally unwilling to stake out a position on this issue at this time. NJCJI will continue its rulemaking advocacy on this issue.