Litigation Finance Disclosure Obligations: Ethics Rules and Court Trends

How disclosure requirements are evolving across ethics rules, federal courts, and arbitral institutions.

Disclosure of litigation funding has become one of the most actively debated questions in the field, and funded parties and their counsel must understand the evolving requirements. The core tension is between transparency, the interest of courts and opposing parties in knowing whether a claim is funded, and the protections of attorney-client privilege and work product, which shield the substance of case strategy and analysis. The trend is toward greater disclosure of the existence of funding, while protecting its substance.

Professional responsibility rules form the baseline. ABA Model Rule 1.8(f) governs a lawyer's acceptance of compensation from someone other than the client, requiring informed client consent and protection of the lawyer's independent judgment and client confidences. Model Rule 5.4 protects the lawyer's professional independence from non-lawyer interference. Properly structured funding complies with both, and the lawyer must ensure that the funding arrangement does not compromise the duties owed to the client.

In federal courts, disclosure practice varies. Some districts have adopted local rules or standing orders requiring disclosure of third-party funding in certain cases, and the question of whether funding agreements are discoverable has been litigated with mixed results. The prevailing view protects the substance of funding agreements as work product while increasingly requiring disclosure of the existence of funding and the funder's identity, particularly in class actions and MDLs where the court has supervisory responsibilities.

Arbitral institutions have moved toward mandatory disclosure of funding to manage conflicts of interest among arbitrators, since an arbitrator must be able to check for relationships with a funder as well as with the parties. Several major institutions now require parties to disclose the existence of third-party funding. Funders structure arrangements to comply with these requirements, recognizing that disclosure of the fact of funding is increasingly standard while the substance remains protected.

Criterica Capital structures funding arrangements to comply with applicable disclosure obligations and to protect privilege and work product, advising funded parties and their counsel on the requirements in their jurisdiction and forum. Our compiled ethics opinion library supports this analysis. Parties navigating disclosure questions can contact our institutional team for guidance specific to their matter.

Discuss your matter with our institutional team.