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Understanding Third-Party Litigation Funding

Third-Party Litigation Funding (TPLF) allows outside investors to finance lawsuits in exchange for a share of any recovery — a practice reshaping the U.S. legal system and global risk environment. As states move to regulate this growing industry, understanding its implications is essential. Explore Zurich’s insights, including national and state statutes, our on-demand webinar, podcast, and fact sheet, to stay informed about how TPLF impacts litigation, transparency, and the future of claims management.

Third Party Litigation Funding Fact Sheet

Third party litigation funding (TPLF) National and state statutes

Third party litigation funding (TPLF) allows non-parties to invest in the potential recovery of lawsuits. State statutes provide varying degrees of regulation as identified below.

 

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  • Cite: Litigation Transparency Act of 2025 - pending
  • Application: Foreign funding agreements and efforts in litigation
  • Disclosure: Addressed; required in civil actions that the agreement be produced
  • Litigation Influence: Addressed in part
  • Foreign Funding: Not addressed
  • Consumer Protection: Not addressed
  • Penalties: Not addressed
  • Registration:
  • Cite: Protecting Our Courts from Foreign Manipulation Act of 2025 - pending
  • Application: Foreign funding agreements and efforts in litigation
  • Disclosure: Required of any foreign person, state or sovereign wealth fund to produce the agreement to the parties, the Attorney General and to the Principal Deputy Assistant Attorney General of National Security
  • Litigation Influence: Addressed
  • Foreign Funding: Addressed and prohibited
  • Consumer Protection: Not addressed
  • Penalties: Sanctions

State statutes

  • Cite: Consumer Lawsuit Lending AR Code section 4-57-109 (2015)
  • Application: Consumer lending
  • Disclosure: Not addressed
  • Litigation Influence: Not addressed
  • Foreign Funding: Not addressed
  • Consumer Protection: Interest rates capped per existing credit laws; Agreements in writing and clearly display interest rate
  • Penalties: Per existing law
  • Registration: Not addressed
  • Cite: Arizona Chapter 28 Litigation Financing
  • Application: All funding contracts
  • Disclosure: Mandatory disclosure of the existence of litigation funding. Parties may request disclosure of agreement after in camera review.
  • Litigation Influence:   Funders prohibited from influencing decisions. Courts to consider conflicts of interest in class actions and MDLs when funders present.
  • Foreign Funding: Prohibits funding from “foreign entities of concern”
  • Consumer Protection: Funder liable under consumer fraud laws
  • Penalties: Sanctions; Invalidation of funding contract
  • Registration: Not addressed
  • Cite: Arizona Court Rule 25-0003
  • Application: Consumer and commercial
  • Disclosure: Certificate filed with court as to funder identity and nature of funding. In camera inspection of agreement. Disclosure of terms to the other parties in some circumstances
  • Litigation Influence:   Not addressed
  • Foreign Funding: Not addressed
  • Consumer Protection: Not addressed
  • Penalties: Not addressed
  • Registration: Certificate filed in court where litigation commenced
  • Cite: California AB 931 (2025)
  • Application: Consumer Funder not addressed
  • Disclosure: Not addressed
  • Litigation Influence: Nonlawyers may not influence litigation
  • Foreign Funding: Nor addressed
  • Consumer Protection: Prohibits attorneys from taking referral fees from funders and sharing fees with nonlawyers
  • Penalties: Discipline for attorneys by State Bar of California
  • Registration: Not addressed
  • Cite: Colorado section 13-16-126
  • Application: Foreign Third-Party Litigation Funder
  • Disclosure: Foreign funder to file certificate and agreement with Attorney General. Information discoverable in litigation
  • Litigation Influence: Prohibits foreign funders from influencing litigation decisions. Prohibits foreign funder from disclosing proprietary and national security information
  • Foreign Funding: Main subject of this legislation.
  • Consumer Protection: Not addressed.
  • Penalties: Actionable by Attorney General under Colorado unfair trade practices law
  • Registration: Yes, with the Attorney General.
  • Cite: Georgia Courts Access and Consumer Protection Act
  • Application: Consumer and commercial agreements
  • Disclosure: Discoverable
  • Foreign Funding: Prohibits foreign adversaries’ investment in civil actions.
  • Litigation Influence: Prohibits funder directing litigation strategy, experts, settlement
  • Consumer Protection: Consumer protection language required in contracts.
  • Penalties: Funder joint & severally liability for frivolous litigation
  • Registration: Requires registration with Georgia Dept. of Banking & Finance.
  • Cite: Illinois Consumer Legal Funding Act
  • Application: Consumer agreements
  • Disclosure: Not required
  • Litigation Influence: Prohibits influence as to underlying claim or resolution
  • Foreign Funding: Not addressed
  • Consumer Protection: Consumer protection language required in agreements. Prohibits referral fees, commissions to attorneys or medical providers.
  • Penalties: As allowed under Illinois Consumer Fraud & Deceptive Business Practices Act
  • Registration: Registration through Illinois Sec. of Financial & Professional Regulation
  • Cite: Civil Proceeding Advance Payment Contracts & Commercial Litigation Financing
  • Application: Consumer and commercial agreements
  • Disclosure: Pursuant to discovery request. Mandated notice to parties and insurer(s) if funding by foreign person
  • Litigation Influence: Prohibits influence as to underlying claim or resolution. Prohibits funder access to proprietary information
  • Foreign Funding: Prohibits funding by “foreign entity of concern”.
  • Consumer Protection: Prohibits referral fees to attorneys or medical providers
  • Penalties: As provided under general contract law
  • Registration: Not addressed
  • Cite: Amended KSA 2024 Supp. 60-226
  • Application: All funding
  • Disclosure: Funder to provide agreement to court for in camera review. Must provide sworn statement to the parties in the case regarding identity and nature of funding
  • Litigation Influence: Requires disclosure of terms creating conflicts or funder control over litigation
  • Foreign Funding: Requires disclosure of any foreign entities
  • Consumer Protection: Not addressed
  • Penalties: Not addressed
  • Registration: Not addressed
  • Cite: Louisiana RS section 9:3580.5
  • Application: All funding
  • Disclosure: Not mandatory but discoverable
  • Litigation Influence: Prohibits foreign funders from making litigation decisions
  • Foreign Funding: Must produce funding agreement to Attorney General
  • Consumer Protection: Not addressed
  • Penalties: Not addressed
  • Registration: Foreign funding must produce funding contract to Attorney General for annual reporting
  • Cite: Maine Consumer Credit Code: Article 12 Legal Funding Practices
  • Application: Consumer agreements
  • Disclosure: Not required
  • Litigation Influence: Prohibits influence as to underlying claim or resolution
  • Foreign Funding: Not addressed
  • Consumer Protection: Consumer protection language required
  • Penalties: As provided by Maine Consumer Credit Code
  • Registration: Requires registration with Maine regulators
  • Cite: Consumer Legal Funding Act
  • Application: Consumer agreements
  • Disclosure: Discoverable
  • Litigation Influence: Prohibits influence as to underlying claim or resolution
  • Foreign Funding: Not addressed
  • Consumer Protection: Consumer protection language required. Prohibits referral fees to attorneys or medical providers
  • Penalties: Contract unenforceable and disciplinary action by Division of Finance
  • Registration: Requires registration with Missouri Division of Finance
  • Cite: Montana Enrolled SB 511
  • Application: Consumer and foreign funders
  • Disclosure: Mandatory disclosure of funding agreement to parties
  • Litigation Influence: Prohibits influence on litigation. Foreign funders prohibited from access to proprietary information
  • Foreign Funding: Prohibits funding by foreign adversaries or persons of concern
  • Consumer Protection: Caps return from settlement proceeds. Prohibits reporting consumer to credit agency. Prohibits referral fees. Prohibits funder from offering legal advice to consumer
  • Penalties: Funder joint and severally liable for sanctions against consumer and/or legal representative
  • Registration: Foreign funders must register with Secretary of State
  • Cite: Non-recourse civil litigation advance contract
  • Application: Consumer agreements
  • Disclosure: Not required
  • Litigation Influence: Prohibits influence as to underlying claim or resolution
  • Foreign Funding: Not addressed
  • Consumer Protection: Consumer protection language required
  • Penalties: As permitted by Ohio consumer protection laws
  • Registration: Not required
  • Cite: Oklahoma Foreign Litigation Funding Prevention Act
  • Application: Commercial funding
  • Disclosure: Commercial funding agreement must be produced to parties upon request
  • Litigation Influence: Not addressed
  • Foreign Funding: Commercial funder must provide certification revealing any foreign state or agency involvement
  • Consumer Protection: exempted from the law
  • Penalties: Not addressed
  • Registration: Not addressed
  • Cite: Non-recourse Civil Litigation Act
  • Application: Consumer agreements
  • Disclosure: Not addressed
  • Litigation Influence: Funder may not influence litigation
  • Foreign Funding: Not addressed
  • Consumer Protection: Consumer protection language in funding agreement. Prohibits referral fees. Funder may not recover more than what consumer receives from outcome of litigation
  • Penalties: Not addressed
  • Registration: Registration with the Secretary of State that will provide annual reporting
  • Cite: Nevada Revised Statutes Chapter 604C (2024)
  • Application: Consumer agreements
  • Disclosure: Not addressed
  • Litigation Influence: Prohibits interference in legal judgment and settlement decisions
  • Foreign Funding: Not addressed
  • Consumer Protection: Fees cannot exceed rate of 40% annually. Fees must be calculated as percentage of consumer’s recovery. Prohibits referral fees. Requires written contract disclosures
  • Penalties: Criminal and civil liability for failure to register. Consumers may file complaints with the Commissioner
  • Registration: Requires registration with Commissioner. Must retain assets of $50,000. Funders subject to audit of records
  • Cite: Tennessee Litigation Financing Consumer Protection Act
  • Application: Consumer agreements
  • Disclosure: Not required
  • Litigation Influence: Prohibits funder from providing legal advice to consumer
  • Foreign Funding: Not addressed
  • Consumer Protection: Consumer protection language required. Prohibits referral fees to attorneys or medical providers
  • Penalties: As permitted by Tennessee Consumer Protection Act
  • Registration: Requires registration with Tennessee Secretary of State
  • Cite: Utah Maintenance Funding Practices Act
  • Application: Consumer agreements
  • Disclosure: Not addressed
  • Litigation Influence: Prohibits influence in litigation
  • Foreign Funding: Not addressed
  • Consumer Protection: Prohibits referral fees. Require consumer protection disclosures
  • Penalties: Revocation of registration. Monetary penalties of $1,000 per violation or $10,000 per willful violation, and restitution to individual
  • Registration: Requires registration with State
  • Cite: Vermont Consumer Litigation Funding Companies
  • Application: Consumer agreements
  • Disclosure: Not required
  • Litigation Influence: Prohibits funder providing legal advice to consumer
  • Foreign Funding: Not addressed
  • Consumer Protection: Consumer protection language required. Prohibits referral fees to attorneys or medical providers
  • Penalties: As permitted by Vermont Consumer Protection Act
  • Registration: Requires registration with Vermont Commissioner
  • Cite: West Virginia Consumer Credit and Protection Act
  • Application: Consumer and commercial agreements
  • Disclosure: Mandated without discovery request required
  • Litigation Influence: Prohibits influence as to underlying claim or resolution
  • Foreign Funding: Not addressed
  • Consumer Protection: Consumer protection language required. Prohibits referral fees to attorneys or medical providers
  • Penalties: Contract may be unenforceable. Fees/costs can be awarded against funder. Penalties levied as permitted by West Virginia Consumer Credit Protection Act
  • Registration: Requires registration with West Virginia Sec. of State
  • Cite: Wisconsin Code of Civil Procedure
  • Application: Consumer and commercial agreements
  • Disclosure: Mandated - no discovery request required
  • Litigation Influence: Not addressed
  • Foreign Funding: Not addressed
  • Consumer Protection: Not addressed
  • Penalties: Not addressed
  • Registration: Not addressed

Disclaimer: Please be advised the following is for general information and educational purposes only and will be updated on an annual basis and may be subject to change after implementation of this tool. The following does not serve as legal advice. To determine the applicability of the contained information to your issues in your jurisdiction, please contact your local counsel.