On behalf of NJBIA’s thousands of members throughout our State, New Jersey’s job creators, thank you for the opportunity to submit testimony in strong support of A-2159, legislation that would bring much-needed transparency, accountability, and fairness to the growing practice of Third-Party Litigation Funding (TPLF) in New Jersey.
New Jersey's business community strongly supports this legislation because it helps improve the state's overall business climate while preserving access to justice for legitimate plaintiffs. Importantly, this bill is not about protecting any particular corporation but is really focused on protecting all job creators, especially manufacturers, as well as improving the overall business climate to help the whole New Jersey economy.
Benefits Both Overall Economic Competitiveness & Big Boost to Manufacturing:
As New Jersey competes for jobs and investment, policymakers should recognize that legal climate has become a significant factor in state economic competitiveness and corporate site-selection decisions. Taxes, energy costs, workforce availability, and regulations all matter. Increasingly, however, companies also evaluate a state's litigation environment. Manufacturers, technology companies, life sciences firms, logistics operations, and other job creators all seek predictable and transparent legal environments. A litigation system influenced by undisclosed outside investors creates uncertainty and increases costs that ultimately affect workers, consumers, and economic growth.
Why is this particularly important for New Jersey's manufacturing sector? As policymakers seek to strengthen domestic supply chains, attract advanced manufacturing investment, invest in the manufacturing workforce, and in general, encourage companies to make things in New Jersey, we must recognize that businesses that make things are more likely to worry about their liabilities regarding those manufactured products. We all want our Garden State to be known for manufacturing products - not manufacturing lawsuits!
Third-Part Litigation Funding Treat to New Jersey Jobs:
The rapid growth of third-party litigation funding has transformed litigation into a multi-billion-dollar investment industry instead of protecting those that have been wronged. Hedge funds, private equity firms, institutional investors, and even foreign interests are investing in lawsuits in exchange for a share of future settlements or judgments. While these arrangements often remain hidden from courts and opposing parties, they can influence which cases are filed, how aggressively they are pursued, and whether settlements are accepted.
The civil justice system was designed to resolve disputes and provide justice—not to serve as an investment vehicle for outside financiers seeking high returns. Yet litigation funders are increasingly financing portfolios of lawsuits, funding mass tort campaigns, supporting plaintiff recruitment efforts, and potentially influencing litigation strategy and settlement decisions.
Legislative Solution:
A-2159 addresses these concerns through a straightforward and balanced approach centered on transparency. The bill requires disclosure of litigation funding agreements so that courts and litigants know when outside investors have a financial stake in a case. Such disclosure is neither radical nor unprecedented. New Jersey's federal courts already require disclosure of litigation funding arrangements, and several states have enacted similar transparency requirements.
Disclosure is essential because undisclosed funding can create conflicts of interest, complicate judicial administration, and potentially allow funders to exert influence over litigation decisions. Judges cannot properly assess conflicts of interest, manage settlement discussions, or evaluate the resources available to parties when they are unaware that outside investors are involved.
The legislation also establishes important guardrails that protect plaintiffs over their outside funders by requiring litigation funders to act in the best interests of funded parties, prohibiting interference with litigation decisions, and ensuring that plaintiffs retain control over their own cases. Equally important, the bill limits the percentage of litigation proceeds that funders can receive, helping ensure that successful plaintiffs—not investors—receive the majority of any recovery.
New Jersey is not alone in confronting this issue. Multiple states have already adopted litigation funding transparency laws, and many others are actively considering similar legislation. In fact, some states are pursuing even stricter approaches, including outright prohibitions on certain forms of third-party litigation funding.
Conclusion:
A-2159 strikes an appropriate balance. It does not eliminate litigation funding. It does not prevent legitimate lawsuits from moving forward. It simply requires transparency, protects litigants, safeguards judicial integrity, and ensures that New Jersey's courts are used to resolve disputes rather than serve as investment platforms for outside financiers.
For these reasons, we respectfully urge the Committee to help strengthen New Jersey's legal and economic climate for employers, manufacturers, workers, and all residents by advancing A-2159. Thank you for your consideration, and please feel free to reach out to Christopher Emigholz, NJBIA’s Chief Government Affairs Officer (cemigholz@njbia.org) for any questions about NJBIA’s strong support of A-2159!
