Litigation Funding
Do plaintiffs have to disclose litigation funding, and which states require it?
Updated July 2026
There is no single national rule as of mid 2026. Federal courts have declined to adopt uniform disclosure, though individual judges and a handful of states now require it. Wisconsin and Montana mandate disclosure by statute; Delaware, New Jersey, and specific judges order it case by case. Everywhere else, a defense team surfaces funding through discovery, not a filing requirement.
Is there a national rule requiring plaintiffs to disclose litigation funding?
Not as of mid 2026. The federal Advisory Committee on Civil Rules has weighed third-party funding disclosure since 2014 and repeatedly declined to act. The Litigation Funding Transparency Act, reintroduced in February 2026 by Senators Grassley, Tillis, Kennedy, and Cornyn, would force disclosure in federal cases, but the same coalition has watched three prior versions die in committee.
The vacuum gets filled one docket at a time. The District of Delaware has run a standing funding-disclosure order since April 2022. New Jersey wrote disclosure into its local rules in 2021, and MDL judges have ordered it in mass-tort dockets such as the 3M earplug litigation. Individual judges go further: in Ballentine v. Meta Platforms, Judge Anne-Leigh Gaylord Moe gave every party ten days to file a verified disclosure of any third-party funder or certify that none existed, with dismissal, default, or monetary sanctions for silence.
Which states require disclosure of litigation funding?
A small but growing group. Wisconsin became the first state to require automatic disclosure of funding agreements in 2018. Montana followed with a 2023 statute covering any civil action. West Virginia and Indiana regulate funder conduct rather than compelling disclosure. Most states still have no statute, so in those jurisdictions funding stays invisible unless a court orders otherwise or a lender's lien surfaces.
| Jurisdiction | Rule | What it does | Status |
|---|---|---|---|
| Wisconsin | Statute (2018) | Automatic disclosure of funding agreements in state court | In effect |
| Montana | Statute (2023) | Written disclosure of funding in any civil action | In effect |
| New Jersey (federal) | Local Civil Rule 7.1.1 (2021) | Disclosure of any non-party funder | In effect |
| Delaware (federal) | Standing order (April 2022) | Disclosure of third-party funding | In effect |
| New York | Consumer Litigation Funding Act | Caps consumer funder charges at 25 percent of recovery (conduct rule, not disclosure) | Effective June 17, 2026 |
| North Carolina | House Bill 315, Session Law 2026-14 | Bans litigation investment in the state outright | Signed June 22, 2026 |
| Federal courts generally | Litigation Funding Transparency Act (proposed) | Would mandate disclosure in federal civil and class actions | Not enacted; died in committee three times |
How can a defense team find out if a case is funded?
Where no statute forces the answer, you go get it. Interrogatories and requests for production can ask directly about funding agreements. A motion can ask the judge to order disclosure, which more courts now grant. Liens filed against settlement proceeds leave a paper trail. And the plaintiff's own conduct, refusing reasonable offers a rational claimant would take, often signals a funder in the room.
- Written discovery: interrogatories and document requests aimed squarely at any funding or financing agreement.
- Motion to compel disclosure: a growing number of federal judges will order it even without a standing rule.
- Lien and financing searches: consumer funders, such as those now regulated under New York's 25 percent cap, record claims against recovery.
- Settlement behavior: a claimant who rejects offers that clear the real case value may be carrying a funder's return on top of the claim.
None of this helps if the signal dies in one adjuster's inbox. Funding pressure shows up as settlement behavior across many files at once, and you only see the pattern if defense counsel reporting is structured the same way on every matter. CaseGlide structures that reporting into portfolio-wide visibility, so the case that will not settle for a rational number stands out instead of hiding.
Why does third-party funding change how a case settles?
Because the funder has its own return to protect, and that return can outrank the plaintiff's interest in resolving. When a funder has staked millions, a reasonable settlement that repays the claimant may not repay the investor, so the case does not settle. The clearest example on the record is Burford Capital's fight to block a Sysco settlement it considered too low.
$140M+
third-party funding Burford Capital sank into the antitrust fight before refusing to let Sysco settle for $50 million
Carina Ventures LLC v. Pilgrim's Pride Corp., 7th Cir. No. 25-1110
Sysco negotiated a $50 million deal to resolve its claim against Pilgrim's Pride. Burford thought the number was too low, withheld consent, and filed for arbitration to block the settlement its own client had struck. On appeal, Seventh Circuit Judge Nancy Maldonado wrote that Burford had turned the courtroom into a trading floor. For a defense team this is concrete: a funded case can stay live long past the point a rational plaintiff would take the money, and knowing funding is present changes the settlement math you bring to mediation.
Common questions
Does a plaintiff have to tell the defense they are using litigation funding?
In most jurisdictions, no, not automatically. As of mid 2026 there is no general national rule, and only a few states such as Wisconsin and Montana compel disclosure by statute. In the rest, a plaintiff can fund a case quietly unless a court orders disclosure or a discovery request forces it. That is why funding often surfaces only through interrogatories, liens against recovery, or settlement behavior that does not match the claim. The pressure can also run the other direction: some carriers are now taking funders and plaintiff firms to court directly. This is legal information, not legal advice, so verify the current rule in your specific jurisdiction before relying on it.
Can insurers sue litigation funders?→Which states have the strictest litigation funding laws in 2026?
Two 2026 developments stand out. New York's Consumer Litigation Funding Act, effective June 17, 2026, caps a consumer funder's total charges at 25 percent of the gross recovery and forces registration. North Carolina went further: House Bill 315, signed as Session Law 2026-14 on June 22, 2026, bans litigation investment in the state outright and lets a court impose civil penalties up to fifty thousand dollars per violation. Neither is a pure disclosure rule; both regulate the funding itself. Wisconsin and Montana remain the clearest examples of states that require the funding agreement to be disclosed. Rules are moving quickly, so confirm the current status in your jurisdictions before you act.
Is litigation funding disclosure required in federal court?
There is no uniform federal rule. The Advisory Committee on Civil Rules has studied third-party funding disclosure since 2014 and has not adopted one. In practice, disclosure depends on where you are: the District of Delaware has required it by standing order since 2022, New Jersey wrote it into local rules in 2021, and MDL judges have ordered it in mass-tort dockets such as the 3M earplug litigation. Individual judges increasingly enter their own standing orders demanding a sworn disclosure or a certification that no funder exists. The proposed Litigation Funding Transparency Act would make disclosure national, but it has died in committee three times and remains unpassed as of mid 2026.
How does knowing a case is funded help a claims team settle smarter?
Funding changes the settlement curve. A funded plaintiff may hold out past the number a rational claimant would accept, because the funder needs its return before the plaintiff sees a dollar. If you know funding is present, you can price that into your reserve and your mediation strategy instead of being surprised at the courthouse steps. The signal usually lives in the file already: offers refused without explanation, demands that climb without new facts, a case that will not close. Seeing that pattern across the portfolio, rather than one adjuster noticing it on one matter, is where structured litigation data earns its place.
How to spot a case going sideways early→CaseGlide is the litigation intelligence platform for Fortune 500 legal departments and insurance claims organizations. It structures live litigation data from defense counsel into executive decisions: reducing defense spend, settling the right cases sooner, and shrinking litigated claim volume.
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