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Conflicts about New Jersey litigation finance disclosures

On Behalf of | Apr 22, 2022 | Business Litigation |

In all states, laws require buyers and sellers to follow certain disclosure obligations in monetary transactions. These obligations sometimes extend to plaintiffs and defendants in lawsuits. However, New Jersey laws are sparking a new debate about the importance of providing financial disclosure about specific cases versus protecting privacy.

Conflicts with disclosure rules

New Jersey litigants claim that the federal courts want them to be too open about their financial affairs. A rule requires plaintiffs to inform their opponents whenever they receive third-party investment funds to cover the costs of their lawsuits.

Filed complaints

Litigation finance companies have filed complaints that the proposed rule is unfair since it requires plaintiffs to disclose information about their litigation finances. In reply, the U.S. Chamber of Commerce stated that the proposal was necessary to promote business litigation that is fair, ethical and transparent.

In previous cases, the disclosure of funding has not been a question. The judges may decide to ignore a request from the other party to acquire information about litigation finance. They often rule the information as protected or irrelevant to resolving the litigation. If the New Jersey federal court approves the recommended rule, both legal parties have to disclose the source of their funds, the type of funds and whether or not the funding is essential to winning the case.

The costs of litigation

A proposed rule requires that a financial disclosure should provide information about funds that are used to cover litigation. The federal courts may require the disclosure of information; however, it’s not always guaranteed that the disclosure is necessary and helpful for any side to win its case.