Taxpayers Protection Alliance has announced that while Washington is shut down, reformers are pushing to regulate third-party litigation funding, a system allowing foreign-backed firms to profit from U.S. lawsuits while avoiding taxes. The announcement was made on X.
According to the Taxpayers Protection Alliance’s October 17 post on X, the organization cautioned that third-party litigation funding (TPLF) lets foreign investors exploit the U.S. judicial system by investing in lawsuits for profit. The post specifically raised the question, "why are foreign entities buying law firms and hijacking the judicial system," highlighting that firms such as Fortress Investment Group and Burford Capital are using international capital—especially from the Middle East—to influence American litigation outcomes. The group’s message emphasized that while the federal government remains shut down, reformers continue efforts to expose and curb foreign control within the U.S. court system.
According to the Wall Street Journal, foreign-backed entities like Fortress Investment Group, which is owned by Japan’s SoftBank and heavily financed by Abu Dhabi’s Mubadala Investment Company, have used litigation funding to profit from American lawsuits while receiving preferential tax treatment. The report explains that these offshore investors often pay little or no U.S. tax on litigation profits, creating an uneven playing field compared to domestic investors. Lawmakers have responded by drafting reforms to close these loopholes and increase transparency, warning that unchecked foreign funding could undermine U.S. judicial integrity.
The U.S. Chamber of Commerce’s Institute for Legal Reform reports that the third-party litigation funding market now exceeds $16 billion in managed assets across more than 40 firms operating in the United States. The Institute warns that a growing share of this capital originates from foreign investors, including sovereign wealth funds in the Middle East, who have little obligation to disclose their involvement. The report cautions that these investments—sometimes extending to full or partial ownership of law firms—allow external actors to influence litigation strategies, drive up case costs, and use the U.S. legal system for strategic or political purposes.
The Taxpayers Protection Alliance (TPA) is a Washington, D.C.–based nonprofit organization advocating for fiscal responsibility, transparency, and accountability in government. According to its official website, TPA works to expose waste, inefficiency, and regulatory abuse, focusing on how both public and private interests impact taxpayers. The group’s latest commentary on foreign influence in litigation funding reflects its broader mission to safeguard taxpayer integrity and protect the U.S. judicial system from exploitation by foreign financial actors.
