The bill adds a new Section 1660 to chapter 111 of title 28, U.S.C., requiring parties and counsel in federal civil actions to disclose the identity of any non‑counsel person who stands to receive payment or other value contingent on the case outcome and to produce the underlying agreement(s) for inspection and copying. The duty covers agreements tied to a single case or a group of cases and includes ancillary documents unless the parties stipulate otherwise or a court orders a different process.
The measure creates a narrow exception for pure loan repayments, loans repaid with modest interest (capped at the higher of 7% or two times the prior year’s average 30‑year Treasury yield), and reimbursements of attorneys’ fees. It also imposes timing rules (disclose by filing or within 10 days after executing an agreement) and a continuing duty to supplement or correct disclosures.
The provision applies to cases pending on or commenced after enactment.
At a Glance
What It Does
The bill requires written disclosure to the court and all named parties of any non‑counsel person with a contingent right to payment or other value tied to a civil action, and production of the agreement creating that right for inspection and copying. It creates narrow exceptions for certain loan repayments and attorney‑fee reimbursements, sets timing and supplement rules, and lets courts alter disclosure by order or party stipulation.
Who It Affects
Third‑party litigation funders, plaintiffs who receive funding, defense counsel and defendants, and law firms that enter ancillary finance or assignment agreements are directly affected. Federal judges and clerks will also handle new disclosure filings and potential disputes over confidentiality and protective orders.
Why It Matters
This would make private litigation finance and contingent payment arrangements visible to courts and opposing parties, affecting settlement dynamics, conflict checks, ethics reviews, and case management. It sets a national disclosure standard where state rules are currently varied and creates predictable discovery paths for funder terms and relationships.
More articles like this one.
A weekly email with all the latest developments on this topic.
What This Bill Actually Does
The bill adds a single, targeted statute to federal civil procedure requiring transparency about third‑party beneficiaries whose payments depend on litigation results. Under the new rule, any party or counsel of record must identify anyone (other than counsel) who has a contingent right to receive money or other value if the case, or a group of related cases, resolves in a way that triggers payment.
That identification goes to the judge and to every named party, and the party must produce the agreement that creates the contingent right—this includes ancillary documents tied to the funding or assignment.
Three narrow categories are not subject to disclosure: repayment of loan principal, repayment of principal plus limited interest (the bill measures the cap as the greater of 7 percent or twice the prior year’s average 30‑year Treasury yield), and reimbursement of attorney’s fees. Those exceptions are phrased so that classic lender/creditor arrangements and routine fee reimbursements do not become public, while most litigation funding and assignment structures do.
The bill leaves room for parties to stipulate a different handling or for courts to order a different approach, but the default is open production for inspection and copying.Timing and accuracy are central: parties must disclose either by the time they file the action or within 10 days after executing a qualifying agreement, whichever is later, and they must timely supplement or correct disclosures if they become materially incomplete or incorrect. The statute applies to actions pending on the date of enactment as well as to new filings, meaning existing cases with undisclosed funders would fall within the rule.
The bill does not specify enforcement remedies or penalties for noncompliance in the text; those will be left to courts’ general powers and existing sanction regimes.
The Five Things You Need to Know
The bill requires parties or counsel to disclose to the court and all named parties any non‑counsel person with a contingent right to payment or other value tied to the outcome of a civil action or a group of actions.
It requires production for inspection and copying of the agreement creating the contingent right, including any ancillary documents, unless the parties stipulate otherwise or the court orders a different procedure.
The disclosure deadline is the later of 10 days after executing the relevant agreement or the time of filing the civil action, and parties must timely supplement or correct disclosures if they become materially incomplete or incorrect.
The statute excludes from disclosure pure repayment of loan principal, repayment of principal plus interest capped at the higher of 7% or two times the prior year’s average 30‑year Treasury yield, and reimbursement of attorneys’ fees.
The law applies to any federal civil action pending on or commenced after enactment, so existing cases with undisclosed funders would be brought within its scope.
Section-by-Section Breakdown
Every bill we cover gets an analysis of its key sections.
Mandatory identity disclosure and production of funding agreements
This subsection compels a party or its counsel to provide a written identification of any non‑counsel person who has a contingent entitlement tied to the case outcome and to produce the underlying agreement(s) to the court and all named parties for inspection and copying. Practically, this sweeps in traditional litigation funders, assignment purchasers, and most contingent recovery arrangements except for counsel themselves, and it expressly pulls in ancillary agreements that could reveal fee splits, security interests, or sub‑funding terms.
Narrow exceptions (loans, capped interest, fee reimbursement)
The bill carves out three specific non‑disclosure categories: repayment of loan principal; repayment of principal plus limited interest (measured as the greater of 7% or twice the prior year’s average 30‑year Treasury yield); and reimbursement of attorney’s fees. Those exceptions aim to preserve ordinary lending and fee‑reimbursement structures from disclosure, but they also create definitional pressure points — for example whether sophisticated funders can reframe arrangements as loans or how to calculate the Treasury‑based cap for agreements executed across different years.
Timing rules and ongoing duty to update disclosures
Subsection (c) sets the timing: disclosures must be made by filing or within 10 days after executing a qualifying agreement, which captures funding executed around filing and post‑filing arrangements. Subsection (d) creates a continuing duty to supplement or correct disclosures materially—triggered either by new information or a court order. Together these provisions require parties and counsel to monitor funding arrangements and produce updates during discovery, rather than treating disclosure as a one‑time formality.
Clerical placement and applicability to pending cases
The bill inserts §1660 into chapter 111 and updates the chapter table. Section 3 makes the statute applicable to actions pending on enactment and to new actions, so the rule has immediate reach into existing litigation. That retroactive application raises procedural issues (e.g., how to handle previously executed, confidential agreements) and creates predictable litigation over protective orders and in‑camera review requests.
This bill is one of many.
Codify tracks hundreds of bills on Justice across all five countries.
Explore Justice in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Opposing parties and defense counsel — they gain access to funder identities and contract terms that can reveal conflicts of interest, repayment priorities, or settlement incentives that affect litigation strategy and settlement valuation.
- Federal judges and court administrators — the disclosures help judges identify potential funder influence, resolve conflicts, and make informed case‑management and settlement‑approval decisions without relying solely on adversary pleadings.
- Insurers, indemnitors, and defendants with subrogation interests — knowing whether a plaintiff’s recovery is subject to a prior assignment or funding obligation preserves rights to assert offsets, subrogation, or liens that would otherwise be obscured.
Who Bears the Cost
- Third‑party litigation funders and investor groups — they face loss of confidentiality for commercial terms, administrative burdens to produce agreements, and reputational exposure that could raise capital costs or drive structuring changes to avoid disclosure.
- Plaintiffs who relied on confidential funding arrangements — disclosure can reveal private financial terms and settlement takeaways they expected kept private, and could chill access to non‑traditional funding sources for meritorious claims.
- Law firms and counsel of record — they must collect, review, and produce funding documents, implement supplement procedures, and manage conflicts and privilege issues, increasing compliance workload and potential malpractice exposure if they fail to disclose.
Key Issues
The Core Tension
The central tension is between the public and adversarial value of knowing who finances and profits from litigation (transparency that aids conflict checks, case management, and fair allocation of recovery) and the private value of confidentiality that enables litigation funding and settlement deals; the statute forces courts to choose how to open private contracts while preserving access to finance and the protections parties expect from nondisclosure.
The bill forces a real choice between transparency and the confidentiality buyers and sellers of litigation risk rely on. It requires parties to produce funding agreements without creating a clear privilege or protective‑order framework; courts will have to reconcile the statute’s default openness with existing authority to protect confidential commercial information.
The statutory exceptions for loans and limited interest reduce that tension in part, but they open a different one: funders can redesign deals to look like loans or shift returns to non‑contingent fees to avoid disclosure. The method for capping interest (using prior‑year 30‑year Treasury averages) is precise but may be litigated for agreements executed across different calendar years or with variable repayment formulas.
The bill is also procedurally minimal on enforcement. It does not create a bespoke remedy for nondisclosure; enforcement will depend on courts’ general sanction powers, discovery rules, and judges’ discretion, which may result in uneven remedies across districts.
Key terms in the statute—"thing of value," "contingent on the outcome," and the scope of "ancillary agreement"—are broad and undefined, inviting litigation over scope. Finally, applying the rule to pending cases produces immediate friction: parties will push for in‑camera review, protective orders, or stipulations to preserve confidentiality, and courts will have to develop a consistent approach while balancing the statute’s transparency objective against settlement confidentiality and access‑to‑capital concerns.
Try it yourself.
Ask a question in plain English, or pick a topic below. Results in seconds.