Bloomberg Law
May 23, 2023, 5:37 PM

Litigation Finance Disclosure Requirement Advancing in Louisiana

Emily R. Siegel

Louisiana is advancing legislation to require disclosure of litigation finance agreements, making it the latest in a string of states to clamp down on the lawsuit funding tool.

The bill is more comprehensive than legislation in other states as it requires litigants to produce a copy of litigation finance agreements, which are rarely viewed and highly secretive.

The legislation requires the disclosure within 60 days of an agreement and can be part of the legal discovery process. If litigants do not comply, then the contract becomes unenforceable, according to the bill.

The legislation underscores how states are pushing to restrict the opaque litigation finance industry that topped $13 billion in assets under management last year. Wisconsin and New Jersey already require disclosure, and US District Judge Colm F. Connolly in Delaware has required it for certain patent cases in his courtroom.

Litigation financiers worry regulations could discourage use of the tool with cases getting tied up in discovery and defendants getting access to confidential information. In litigation finance, funders pay up front for attorneys fees and other legal costs in return for a monetary awards if lawsuits are successful.

The bill passed 8 to 5 in the Louisiana House Civil Rules and Procedure Committee on Monday after winning approval in the full state senate a few weeks earlier.

State Senator Barrow Peacock, who sponsored the bill, cited concerns over national security breaches as a motivation for it. Air force bases and Gulf Coast resources make the state home to proprietary secrets foreign entities would benefit from, he said.

The bill brings needed transparency to litigation finance, Peacock said. “It’s flourished in the shadows with very minimal oversight,” he said.

Dai Wai Chin Feman, director of commercial litigation strategies at New York-based litigation funder Parabellum Capital, described the national security issue as “entirely speculative” when he testified in opposition to the bill.

“Those who engage in fear-mongering by spreading careless and baseless accusations without any evidence or facts in order to obtain a long-sought policy agenda are actually subverting our national security interests,” Chin Feman said in his testimony.

Next Steps

The legislation will next be scheduled for a house floor debate as early next week where amendments will be decided on. If the Senate concurs with the House changes, the legislation will go to the governor’s office for a signature.

The legislative session wraps up on June 8.

Peacock said he spoke with the International Legal Finance Association about potential changes but has not received any proposals.

“Through this whole process I’ve said we’ll work with you and their position had been they just don’t want the bill to be there,” he said.

Chin Feman said Louisiana already has a rule that discourages the use of litigation finance. The rule states that if a litigious right is assigned to another party, then the debtor can extinguish his obligation and pay the price the assignee paid for the assignment with interest.

Nathan Morris, senior vice president of legal advocacy at the US Chamber of Commerce, which is supportive of the bill and had a representative at the hearing, said the legislation already allows the court to modify disclosures when requested so parties can redact proprietary information.

To contact the reporter on this story: Emily R. Siegel at

To contact the editors responsible for this story: Chris Opfer at; John Hughes at

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