Comer Urges Chief Justice Roberts to Examine Litigation Funding

Another legislator wants to regulate litigation finance, this time asking Chief Justice John Roberts to get involved.

Rep. James Comer (R-Ky.), Chair of the Committee on Oversight and Accountability, in a Friday letter to Roberts asked the Judicial Conference to review the role of litigation finance. He said the conference should consider enacting transparency rules including mandatory disclosure of outside funding in federal lawsuits.

“Understanding the funding terms, sources, financial details, and potential conflicts of interest are vital to ensuring informed decision-making and guarding against perceptions of undue influence,” Comer wrote.

The Judicial Conference meets twice a year and makes recommendations to Congress concerning legislation involving the judicial branch. Roberts, as chief justice, serves as its presiding officer.

The US Chamber of Commerce and some state and federal officials have fixated on the $15.2 billion litigation finance industry, in which investors back lawsuits in exchange for a portion of an award or settlement. They have raised concerns over funders controlling litigation and say the arrangements could pose a national security issue.

Mostly Republican lawmakers have pushed for legislation that would require parties to publicly disclose whether they are receiving outside funding. On Thursday, Rep. Darrell Issa (R-Ca.) introduced a discussion draft of legislation that would mandate disclosure of litigation finance agreements in civil lawsuits.

The funding industry has pushed back, saying disclosure would only prolong litigation and give defendants an edge.

Comer wrote that the committee had evidence that litigation funding hurts litigants and that investments are being made by foreign actors. He cited two examples involving leading private equity companies.

Fortress Investment Group, which has put $6.8 billion toward litigation finance, is owned by Abu Dhabi sovereign wealth fund Mubadala Investment Company, Comer noted.

He also referenced Apollo Global Management and Centerbridge Partners financing an attorney representing clients suing PG&E Corp. for its role in the 2017 and 2018 California wildfires. Apollo held more than $600 million in debt and insurance claims against the company, according to Comer, and Centerbridge was simultaneously a shareholder that also held $496 million in debt and insurance claims.

“This raises serious questions as to whether the attorney was acting in the interest of the claimants, or his benefactors, when negotiating the settlement,” he wrote.

‘Money Play’

Comer has had an eye on litigation finance since last year when he led an oversight committee hearing on its dangers. He took aim at lawsuits he said were funded by left-wing activists aiming to hijack the US legal system.

Aviva Wein, assistant general counsel for Johnson & Johnson, testified before the same House panel last year. She said during the hearing that litigation finance increases the amount of meritless claims through false and misleading advertisements, which ultimately harms manufacturers.

“Mass tort litigation has been transformed into a money play: driven, funded and distorted by legal financial entrepreneurs,” she said.

Justice Roberts has not publicly commented on the industry.

His top adviser, Judge Robert M. Dow Jr., previously said concerns over litigation funders taking control of cases can be addressed by disclosing agreements privately to judges and parties involved in the lawsuits. Dow relinquished his seat on the federal district court in Chicago after being tapped in 2022 to serve as counselor to Roberts.

“As long as the funder doesn’t have control, I don’t think it’s gonna be a major issue for judges,” Dow said, speaking at a an April conference in New York.