Republican state AGs sound alarm over foreign litigation funding

A man walks through the street carrying a briefcase in Manhattan, New York City
A man walks through the street carrying a briefcase in Manhattan, New York City, U.S., August 19, 2020. REUTERS/Andrew Kelly

(Reuters) - A group of 14 Republican state attorneys general on Thursday warned of what they called potential economic and national security threats posed by investments in U.S. lawsuits by "foreign adversaries."

In a letter addressed to U.S. Attorney General Merrick Garland, the state attorneys general asked the U.S. Department of Justice to describe what the federal government "has done or is currently doing to address these concerns" related to the practice known as third-party litigation funding.

A Justice Department spokesperson did not immediately respond to a request for comment.

The letter, from a group led by Georgia Attorney General Chris Carr and Virginia Attorney General Jason Miyares, comes less than two months after the U.S. Chamber of Commerce Institute for Legal Reform said in a report that unspecified foreign actors could use investments in U.S. lawsuits to undermine national security.

The business lobby called for legislative and regulatory changes to heighten disclosure and reporting requirements. Thursday's letter cited the Chamber of Commerce report in a footnote and echoed many of its arguments.

The Chamber has long sought regulation of litigation funders, which typically provide financing for individual lawsuits or case portfolios in exchange for a cut of any settlement or judgment.

The organization and other critics have largely been unsuccessful in lobbying for mandates to disclose information about sources of lawsuit funding.

The International Legal Finance Association, a global trade group representing big commercial litigation funders, in a statement called the claims in Thursday's letter "baseless, not supported by evidence, and cribbed directly from Chamber of Commerce talking points."

The state attorneys general said third-party funding may be harming U.S. economic and national security because the extent of investments in litigation by the country's enemies is unknown.

"Foreign adversaries leveraging our judicial system in order to undermine our nation's interests is a grave concern to our States," the letter said.

The attorneys general called on the Justice Department to share information on any steps taken, and "ask that our federal partners take action" to clamp down on the practice by foreign actors.

Attorneys general from Alabama, Arkansas, Indiana, Kansas, Kentucky, Montana, Nebraska, Ohio, South Carolina, Tennessee, Utah and West Virginia also signed onto the letter.

Read more:

U.S. Chamber cites foreign enemies in latest call to stem litigation funding

Litigation funders howl as N.J. adopts disclosure requirement

Our Standards: The Thomson Reuters Trust Principles.

Thomson Reuters

Sara Merken reports on privacy and data security, as well as the business of law, including legal innovation and key players in the legal services industry. Reach her at