On June 8, 2026, New Jersey senators advanced legislation mandating the disclosure of third-party litigation funding agreements. This move has sparked debate among legal professionals, with trial lawyers and litigation finance representatives expressing concerns that such requirements could deter funding for plaintiffs engaged in expensive legal battles.
The proposed legislation, Assembly Bill 2159, stipulates that in any civil action, parties or their attorneys must disclose any litigation funding agreements. These agreements are defined as written contracts where a third party provides financial support to a named party or affiliated law firm, creating a direct or collateralized interest in the proceeds of the civil action or group of actions. The bill requires that such agreements be disclosed at the time of filing an initial pleading or when the agreement is made, if it occurs after the initial pleading. Additionally, any amendments to these agreements must be provided to the court and all parties at the time the amendment is made. The bill also allows for the discovery of participants in any litigation funding agreement and the nature of that investment or arrangement. ([pub.njleg.state.nj.us](https://pub.njleg.state.nj.us/Bills/2026/A2500/2159_I1.PDF?utm_source=openai))
Furthermore, the legislation codifies a fiduciary duty by litigation funders to the funded party, ensuring that funders act in the interests of the funded party. It also prohibits funders from engaging in certain conduct that could interfere with the funded party’s civil action, such as influencing decisions related to the initiation, conduct, settlement, or resolution of the underlying civil action, offering legal advice, or selecting a funded party’s attorney. ([pub.njleg.state.nj.us](https://pub.njleg.state.nj.us/Bills/2026/A2500/2159_I1.PDF?utm_source=openai))
Opponents of the bill argue that mandatory disclosure could discourage third-party funding, potentially limiting access to justice for plaintiffs who lack the resources to pursue costly litigation. They contend that such requirements may expose sensitive financial arrangements, giving opposing parties strategic advantages and complicating the litigation process.
Proponents, however, assert that transparency in litigation funding is essential to maintain the integrity of the legal system. They argue that disclosure helps identify potential conflicts of interest and ensures that all parties are aware of the financial dynamics influencing the case. This perspective aligns with a broader trend toward increased scrutiny of third-party litigation funding, as evidenced by similar disclosure requirements adopted in other jurisdictions. ([lexology.com](https://www.lexology.com/library/detail.aspx?g=7559fc8d-514c-45a0-a330-a4ea5c42a045&utm_source=openai))
The advancement of Assembly Bill 2159 reflects New Jersey’s ongoing efforts to balance the interests of plaintiffs seeking financial support for litigation with the need for transparency and fairness in the legal process. As the bill progresses through the legislative process, it will be crucial to monitor how these disclosure requirements impact the litigation landscape and access to justice in the state.