U.S. Senators Marco Rubio (R-Fla.) and Rick Scott (R-Fla.) have penned letters to the chief judges of Florida's three federal districts, emphasizing the threats to the U.S. judicial system presented by foreign third-party litigation funding (TPLF). The senators expressed that the federal judiciary requires increased transparency around foreign TPLF to avert "hostile foreign actors" from influencing litigation.
According to a press release, Rubio and Scott have urged the judges to contemplate establishing disclosure requirements in their jurisdictions related to foreign TPLF. They stated in their letters, "The potential impacts of allowing unfettered and undisclosed foreign TPLF throughout the judiciary could be severe unless properly addressed. Foreign actors attempting to capitalize on such influence may seek to, among other things, forward frivolous lawsuits, needlessly and excessively prolong litigation disputes, exacerbate domestic discourse, or seize control of the litigation from the case’s original parties."
In light of increased scrutiny of foreign TPLF, Politico reported that lobbying firm Miller Strategies recently announced its intention to update disclosures for the International Legal Finance Association. This decision was prompted by the omission of five foreign members of the association. Concerns surrounding foreign funding have escalated after revelations that at least one Chinese company had financed multiple lawsuits in U.S. courts centered on intellectual property rights. Former acting director of the U.S. Patent and Trademark Office Joseph Matal told Bloomberg that this involvement confirmed "our worst fears," because "anything China does is concerning because nothing over there is really independent."
The U.S. Chamber of Commerce Institute for Legal Reform (ILR) issued a report in December 2022 cautioning about national security implications associated with foreign TPLF. The report revealed that TPLF "is a multibillion-dollar global industry that allows hedge funds to secretly invest in lawsuits in exchange for a cut of any award or settlement." The report warned that without disclosure requirements surrounding litigation financing, foreign governments could potentially influence lawsuits against American businesses, including those in sensitive industries such as defense.
A legal alert from the law firm Conroy Simberg in December 2023 cautioned that TPLF represents a form of "legal system abuse" and raises ethical concerns for the attorneys involved. Conroy Simberg pointed out that critics of TPLF have noted that the practice can prolong litigation, prioritize profits over justice, lead to inflated damages, and influence the outcome of lawsuits. "Having more fingers in the pie can lead to going after a bigger pie," said Conroy Simberg.
