Originally published by Bloomberg Law on June 19, 2019
Therium Capital Management’s Patrick Dempsey lays out why he thinks proposed federal legislation to force parties in a lawsuit to disclose their litigation finance arrangements is unnecessary, discriminatory, and unfair.
We should probably be flattered.
By “we,” I mean those of us in legal finance. Collectively, we have become the subject of an intense effort by the U.S. Chamber of Commerce to push through rules that would force parties in lawsuits to disclose their litigation finance arrangements.
The Chamber has opened several fronts in this campaign.
First, it supports federal legislation on the topic, which was introduced by four Republican U.S. senators earlier in 2019.
Second, it is lobbying the federal judiciary’s Committee on Rules of Practice and Procedure to create a special rule of civil procedure mandating the disclosure of litigation financing.
And third, it is pushing for legislation across the country to mandate disclosure at the state level.
Initiatives like the ones the Chamber is pursuing have failed in the past. In 2018, a similar version of the legislation failed to make it out of committee. Meanwhile, the procedural rule has an even longer history of defeat. The Advisory Committee on Civil Rules rebuffed it in 2014, 2016, and 2017, and the Chamber has reanimated it, zombie-like, again this year.
The persistence of the effort is admirable. It is also a telling indication of just how effective litigation finance is as a tool to level the judicial playing field between the corporate defendants the Chamber represents and parties asserting claims against them. So yes, we are flattered.
But thankfully, flattery does not get laws passed (at least in this instance). Instead, the Chamber’s proposal for compulsory disclosure should stand or fall based on the merits of the arguments behind it. And it has fallen—repeatedly. Indeed, the forced disclosure of litigation finance is bad policy for any number of reasons.
We will review the most obvious of them here.