Investors Lament ‘Anti-Foreign’ Litigation Funding Push in US

Federal legislation targeting foreigners who invest in US lawsuits is raising concerns among international financiers.

The bill by Rep. Ben Cline (R-Va.) bans sovereign wealth funds from backing US litigation, potentially disrupting operations of funders such as Fortress Investment Group, Burford Capital, Omni Bridgeway, Ares Management Corp., Ellington Management Group and BlackRock Inc.

Funders that lack sovereign wealth backing would also be affected. The Cline bill requires overseas investors to disclose their roles in US lawsuits, which the funders say could delay court proceedings as defendants seek information about them in discovery.

The emphasis on foreign funders is an approach by the US Chamber of Commerce and other opponents of litigation finance to stymie the nascent industry. The legislation has sparked an intense lobbying campaign in the new year, with a pro-industry lobbying group forming after the House Judiciary Committee voted 15-11 in November to recommend the bill.

The practice of investing in lawsuits with the hope of winning proceeds from successful cases has become popular for financiers, who seek returns uncorrelated to the stock market. The litigation funding market is expected to grow to around $50 billion by the mid-2030s from nearly $21 billion last year, according to a report from boutique asset management firm Katch Investment Group.

The threat of US legislation has forced some foreign fund managers to reassess their growth strategies. “This lack of certainty and safety it is not helping anybody to feel happy about investing in the USA,” said Ignacio Delgado, the general counsel for Loopa Finance, formerly known as Qanlex, which doesn’t currently fund US litigation and primarily operates in Latin America and Europe.

The US Treasury Department’s Office of Foreign Assets Control already restricts investment from countries of concern such as Iran and Russia, “so why do you need more law?” asked Susan Dunn, founder of UK-based Harbour Litigation Funding.

“There’s so much anti-foreign that’s going on in the US at the moment,” said Dunn, who also chairs the Association of Litigation Funders of England and Wales. From US lawmakers’ perspective, “it’s like if I use the ‘foreign’ word then that’ll get me” bill passage.

Cline’s Momentum

Cline’s proposal is the second version of legislation that singles out foreign funding. After the House panel passage it is the farthest along of three federal bills attempting to regulate litigation finance. The Chamber and other industry opponents have pressed for regulation because they say litigation finance results in frivolous lawsuits that raise the cost of doing business.

The House Judiciary Committee approval of the bill (HR 2675) was a major step forward for one of his top legislative priorities, Cline said in an interview.

“I’m hopeful that the House will take it up soon,” he said. “There’s an appetite for acting sooner rather than later, and I think that it’s a bipartisan piece of legislation that should be able to pass with significant levels of support in both the House and the Senate.”

Foreign funders’ access to US litigation could be a threat to national security, Cline said. That claim that originated in a US Chamber of Commerce report from 2022.

“Judges, the parties, and the Justice Department should know if foreign-sourced money is being poured into US,” the Chamber’s Institute for Legal Reform said in November when Sen. John Kennedy (R-La.) introduced the Senate version of Cline’s bill.

Sovereign Wealth

Litigation funders tied to sovereign wealth funds are among some of the biggest investors in the industry.

A subsidiary of Abu Dhabi’s sovereign wealth fund Mubadala Investment Co. acquired a majority stake in Fortress in 2024, according to a press release. Burford Capital has said it has a funding arrangement with a sovereign wealth fund, though it didn’t disclose which one.

Ares, which acquired a 70% interest in litigation funder Omni Bridgeway in 2025, in public filings lists sovereign wealth funds as part of its investor base. And Ellington Management Group and BlackRock, which have some investments in legal assets, in filings count sovereign wealth funds they didn’t name as investors.

The bill if enacted would leave the foreign funders with a stark choice for future litigation finance deals: Unwind relationships with the sovereign wealth funds, which could be complex and costly, or cease investments in US cases going forward.

Fortress did not provide comment. Burford Capital did not respond to a request for comment. Ares declined to comment. An Omni Bridgeway representative said they do not believe the bill will affect the company but that additional details would be needed to assess that fully. Ellington did not respond to a request for comment, and BlackRock declined to comment.

‘Grouped Together’

The possibility of forced disclosure has frustrated executives at the foreign companies, who note they also get investments from US entities. “Everybody ends up being grouped together,” Dunn said.

Nick Rowles-Davies, founder and CEO of litigation investor Lexolent, which is based in the United Arab Emirates, said disclosure requirements in the legislation could discourage financiers from wanting to participate. “We don’t fear regulation or disclosure,” Rowles-Davies said of Lexolent. “The challenge will be what effect does it have on the investors?”

There currently is no federal law that requires litigation funders to disclose their identities. There have been past legislative attempts, however. A federal court in Delaware that requires disclosure has seen a drop in the number of third-party-funded cases.

As Cline and other lawmakers call for regulation, the litigation funders have become more organized. A second trade group, the American Civil Accountability Alliance, launched in January to join the International Legal Finance Association in lobbying for the industry.

Still, the foreign investors are surprised they need to wage such battles.

“I would’ve thought by now it would’ve just kind of calmed down and just been another part of the legal landscape,” Dunn said of litigation finance. “It does seem to have been quite sort of weaponized politically.”