California congressman introduces litigation funding disclosure bill

California Congressman Darren Issa Friday introduced a bill that would provide for the disclosure of third-party beneficiaries in civil litigation.

The measure would require at the outset of litigation the disclosure of investors that have a right to receive payment based on the outcome of a lawsuit.

Mr. Issa, a Republican, said in a July statement introducing a draft of the legislation that third-party litigation funding raises national security concerns because recent cases revealed intellectual property lawsuits were filed by Chinese-backed funders against U.S. companies.

Legal experts cite third-party litigation funding as a driving force of so-called social inflation, the trend of particularly large verdicts and settlements.

The American Property Casualty Insurance Association, an insurance industry group, encouraged members of Congress to support the legislation in a press release issued Monday.

“The misuse of the legal system fueled by third-party litigation funding has formed a litigious culture, ultimately burdening every consumer and business through increased costs, including the cost of insurance throughout the country,” Nat Wienecke, APCIA’s senior vice president of federal government relations said in a statement issued by the group.

The bill was referred to the House Committee on the Judiciary.