The last few years have seen a sharp rise in the use of third party litigation funding for plaintiffs and their counsel. That trend has given rise to questions as to these arrangements, including their legality, practicality, terms, and—importantly for investors wishing to remain behind the scenes—the extent to which the arrangements must be disclosed.

As more lawsuits are funded by third parties, courts have been faced with novel discovery questions. Those include whether and to what degree discovery is appropriate with respect to the parties involved in the litigation funding, the specific funding arrangements, and the information provided to funders to aid in their assessment of the potential investment. Currently there are few rules that specifically address disclosure of litigation funding arrangements, leaving courts to deal with disclosure questions on a case-by-case basis. The results sometimes have been conflicting.

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