Protecting TPLF From Abuse Act
- Sponsor
- Rep. Issa, Darrell [R-CA-48]
- Committees
- Judiciary Committee (primary)
- Last action
- Jan 12, 2026
Bottom line
This bill aims to increase transparency in federal civil litigation by requiring the disclosure of third-party funding agreements, potentially altering the dynamics of legal disputes and increasing judicial oversight.
What it actually does
This bill amends title 28, United States Code, to mandate the disclosure of third-party litigation funding agreements in federal civil actions. It requires parties to identify any person with a contingent financial interest in the outcome of a lawsuit, produce the funding agreement for in camera court review, and potentially disclose it to other parties, subject to protective orders and privilege. The bill includes specific exceptions for traditional loans, attorney's fees, and grants, and protects the privacy of certain donors or members of funding entities.
Proponents argue
Proponents argue that increased transparency in third-party litigation funding (TPLF) is essential to prevent manipulation of legal proceedings, address potential conflicts of interest, and ensure fairness by revealing who truly stands to benefit from a lawsuit's outcome. They contend that hidden funding can incentivize frivolous lawsuits or prolong litigation, and that disclosure will allow courts and parties to better assess motivations and potential biases, thereby safeguarding the integrity of the judicial system.
Opponents contend
Opponents might argue that mandatory disclosure of TPLF agreements could chill legitimate access to justice for plaintiffs who rely on such funding, particularly in complex or high-stakes cases where traditional financing is unavailable. They may also contend that these agreements are proprietary business information, and their disclosure could disadvantage funded parties by revealing litigation strategy or financial vulnerabilities to opposing counsel, creating an uneven playing field.
The bill is concise and clearly structured, making it accessible for an informed reader to understand its provisions and implications within a short timeframe.
Section 2(a), adding new 28 U.S.C. 1660(a)(1)
Mandatory Disclosure of Third-Party Beneficiaries
This provision requires any party or their legal counsel in a federal civil action to disclose in writing to the court and all other named parties the identity of any person (other than counsel of record) who has a legal right to receive any payment or thing of value that is contingent on the outcome or proceeds of the civil action. This includes any portion of a settlement, judgment, award of attorney's fees, or other proceeds from the lawsuit.
Supporters argue
Supporters argue this disclosure is crucial for identifying potential conflicts of interest, understanding the true motivations behind litigation, and preventing external parties from unduly influencing legal outcomes without public accountability. They believe it promotes fairness and integrity in the judicial process.
Critics contend
Critics may argue that this requirement creates an unnecessary administrative burden on litigants and funders, and that the identity of funders is not always relevant to the merits of a case. They might also contend it could deter legitimate funding, impacting access to justice.
Tradeoffs
This provision balances the desire for greater transparency in legal funding against concerns about the privacy of funders and the potential for increased administrative burdens on litigants and the courts.
Section 2(a), adding new 28 U.S.C. 1660(a)(2) and (3)
Court Review and Production of Funding Agreements
This provision mandates that the party or counsel must produce the actual funding agreement, along with any ancillary documents, to the court for an in camera (private) review. After this review, the court will determine which parts of the agreement, if any, are to be produced to other named parties for inspection and copying. This process is subject to protective orders and limitations related to attorney-client privilege, the attorney work product doctrine, or other applicable privileges, and specifically allows for redactions to protect the identity of certain members, donors, or associates.
Section 2(a), adding new 28 U.S.C. 1660(b)
Specific Exceptions for Traditional Financing and Donor Privacy
The bill establishes several exceptions to the disclosure requirements. These include arrangements solely for the repayment of a loan's principal, or principal plus interest that does not exceed the higher of 10 percent or three times the annual average 30-year constant maturity Treasury yield. Reimbursement of attorney's fees paid to counsel of record and reimbursement of a grant are also excepted. Additionally, the identities of donors, members, or associates of a funding entity are protected from disclosure unless they themselves have a direct legal right to receive a contingent payment from the lawsuit's outcome.
Section 2(a), adding new 28 U.S.C. 1660(c) and (d)
Disclosure Timing and Ongoing Obligation
The bill establishes clear deadlines for when disclosures must be made: not later than 10 days after the execution of any funding agreement, or at the time of initial disclosures under Federal Rule of Civil Procedure 26(a)(1), or at a time set by the court, whichever is latest. Furthermore, it imposes an ongoing duty on the party or counsel who made the initial disclosure to supplement or correct it in a timely manner if they learn the disclosure has become incomplete or incorrect in a material respect, provided the new information has not otherwise been made known to other parties.