Bill > A5566

Introduced Session

This bill requires disclosure of third-party litigation funding agreements and establishes certain responsibilities for litigation funders. The bill provides that, in any civil action, a party or party's attorney is to, without awaiting a discovery request, disclose any litigation funding agreement, defined, in part, to mean a written agreement in which a third party agrees to provide funding to one of the named parties or affiliated law firms and that creates a direct or collateralized interest in the proceeds of the civil action or group of civil actions. The bill also provides that the litigation funding agreement is to be disclosed at the time of the filing of an initial pleading or at the time of the agreement, if the agreement occurs after the initial pleading. Any amendment to a litigation funding agreement that is required to be disclosed is to be provided to the court and all parties at the time the amendment is made. The participants to any litigation funding agreement and nature of that investment or arrangement also are permissible subjects for discovery. The court is authorized to impose sanctions for a party's failure to make the required disclosures. The bill does not require disclosure of a contingent fee agreement entered into by a party and the party's legal representative in a civil action. The bill additionally codifies a fiduciary duty by litigation funders to a funded party to ensure the funder acts in the interests of the funded party. The litigation funder is jointly liable for costs and any monetary sanction against the funded party or funded party's attorney. The bill also prohibits a litigation funder from engaging in certain conduct that can interfere with the funded party's civil action. Specifically, a funder is prohibited from (1) influencing, making or overturning decisions relating to the initiation, conduct, settlement, or resolution of the underlying civil action, (2) offering to provide or providing legal advice to the funded party or party's attorney, or selecting a funded party's attorney, (3) attempting to secure a particular remedy or obtain a waiver of any remedy potentially available to the funded party, (4) receiving any payment that exceeds 25 percent of the litigation proceeds, or receiving without express consent of the funded party a combined payment with the funded party's attorney fee that exceeds 50 percent of the monetary relief obtained, and (5) assigning or securitizing a litigation funding agreement in whole or in part. Finally, the bill provides that a litigation funding agreement is unenforceable by the litigation funder or any successor-in-interest if the funder breaches its fiduciary duty or engages in conduct prohibited by the bill. The bill also provides that a court may find a litigation funding agreement violates the bill and is unenforceable. Further, a funder's breach of fiduciary duty or engagement in conduct prohibited by the bill constitutes an unfair or deceptive act or practice and a violation of the New Jersey consumer fraud act. The bill also authorizes a court to impose sanctions, in addition to any remedy otherwise available, for noncompliance with any provision of the bill.

AI Summary

Committee Categories

Ellen Park (D)*,  Eliana Pintor Marin (D)*,  Bill Spearman (D), 

Assembly Financial Institutions and Insurance Hearing (10:00:00 12/11/2025 Committee Room 11, 4th Floor, State House Annex, Trenton, NJ) (on 12/11/2025)

Official Document