Proposed Bill in Congress Aims to Limit Civil Litigation

A new bill in Congress aims to address litigation abuses, but many believe it will actually restrict access to civil courts for average Americans.

Sponsored by Rep. Darrell Issa (R-Calif.), the legislation requires plaintiffs in any civil action to disclose “the identity of any person (other than the attorney of record) who is legally entitled to receive any payment or thing of value” from the case.

It’s clear what the implications could be: once these names are made public, they could be exposed to harassment from activists and corporate interests. Essentially, those who fund lawsuits could face repercussions.

This seems to be, well, an extortion plot in disguise, and it would be completely legal.

Third-party litigation funding typically involves an individual, company, or organization providing financial support to a plaintiff or their law firm to cover costs. If the case is successful, the funder receives a share of the judgment or settlement; if not, they get nothing.

This arrangement exists for a reason. Litigation can get really expensive. Complex cases involve various costs like investigations, expert witnesses, and protracted legal work. Wealthy defendants know how to stall the process, making it even harder for less-funded plaintiffs to prevail.

In this context, litigation funding can offer crucial support, helping plaintiffs take on defendants with significant financial resources.

Issa has labeled this funding as an abuse because private investors sometimes back lawsuits with the expectation of a return. He stated, “We believe that when third-party investors are funding litigation in federal court, that should be disclosed, not hidden from the world.” But this logic seems flawed if we consider the trial’s primary purpose.

In civil trials, the jury asks three main questions: Did the defendant do what the plaintiff alleged? Did those actions cause any harm? If so, what were the damages? Disclosing the funder’s identity won’t clarify any of these points; rather, it could introduce distracting arguments. Defendants might claim the lawsuit is unjust because the plaintiffs were merely pawns under someone else’s funding, but this should not merit special consideration.

What truly matters is the defendant’s actions and whether they caused harm to the plaintiff. The source of the plaintiff’s financial backing shouldn’t be a factor in determining the facts.

Additionally, a successful plaintiff should have the freedom to use their award as they see fit, such as settling debts. However, Issa’s proposed legislation could deter funders by enforcing disclosure, while defendants remain unfettered and able to hire top legal firms.

Interestingly, this bill tackles a perceived problem that doesn’t exist. According to reports, the number of yearly lawsuits in the U.S. has dropped by about a third since 2012. Less than 1% of state civil cases go to trial, and even fewer at the federal level. Third-party funding isn’t overcrowding the courts; in fact, it’s broadening access to justice.

The proposed bill doesn’t just ignore the bigger picture; it also oversteps federal jurisdiction. Federal cases make up only about 1.4% of civil cases nationwide. States are already allowed to regulate litigation funding, and several have done so. As of mid-2025, states such as Indiana, Kansas, and Louisiana will have their own regulations in place. The evidence suggests most states aren’t treating this as a pressing concern.

The argument that funding leads to frivolous lawsuits doesn’t hold up under scrutiny. A 2022 report by the U.S. Government Accountability Office noted that funders usually evaluate cases carefully, only taking on those with merit. They operate under the simple reality that they only profit if a case succeeds.

Economic realities ensure that third-party funding isn’t susceptible to abuse; rather, it democratizes access to litigation.

Issa’s bill actually works against this by intimidating potential funders, which would further tilt the landscape in favor of big corporations and the wealthiest individuals—those who can outspend everyone else and endure lengthy legal battles.

Ultimately, civil litigation acts as a check on power, allowing ordinary citizens to hold influential entities accountable. Limiting access to courts won’t prevent abuses; it will enable greater ones by further insulating the powerful from scrutiny. This isn’t the reform our society needs.