Litigation Funding Transparency Act of 2026

Increased Transparency in Litigation: Parties must disclose the identity of any third-party funder in writing to the court and other parties, which provides more clarity during a lawsuit (Sec. 2(b)(1)).

Oversight of Foreign Influence: The bill requires disclosure of whether a funder is a foreign state, foreign person, or a commercial enterprise controlled by a foreign entity (Sec. 2(b)(2)).

Public Accountability through Reporting: The Administrative Office of the United States Courts must submit and post reports listing identified foreign funders, the specific court case, and the amounts provided (Sec. 2(f)).

Protection of Litigation Strategy: The Act ensures that third-party funders cannot exert influence, control, or discretion regarding a party's decision-making or settlement negotiations (Sec. 2(g)(1)).

Protection of Sensitive Discovery: Third-party funders are prohibited from viewing discovery materials subject to a protective order unless specifically authorized by a court (Sec. 2(h)(1)).

Burden of Disclosure Requirements: Parties or counsel of record are required to disclose funder identities, provide agreements for inspection, and transmit copies of certain disclosures to the Administrative Office of the United States Courts (Sec. 2(b)).

Strict Deadlines for Compliance: Disclosures must be made no later than 10 days after an agreement is executed or at the time of service of the action (Sec. 2(c)).

Mandatory Updates: Parties have a duty to supplement or correct disclosures in a timely manner if they learn the information has become incomplete or incorrect (Sec. 2(d)).

Risk of Legal Sanctions: Failure to comply with disclosure obligations can result in sanctions under Rule 37 of the Federal Rules of Civil Procedure (Sec. 2(e)).

Risk of Contempt Charges: Both funders who attempt to influence litigation strategy and those who view protected discovery materials without authorization may be held in contempt of court (Sec. 2(g)(2) and Sec. 2(h)(2)).