A Senate panel on Thursday advanced legislation, strongly supported by NJBIA, that would bring greater transparency in civil liability litigation by requiring disclosure to all parties if a private equity firm or hedge fund is paying a plaintiff’s lawyers to sue a New Jersey business.
NJBIA Chief Government Affairs Officer Christopher Emigholz told the Senate Commerce Committee the bill didn’t prevent third-party litigation funding, but it addresses a trend where private equity firms use the civil justice system as an investment vehicle by funding numerous lawsuits brought by unrelated parties in exchange for a share of the plaintiff’s monetary award.
Without transparency, third-party funded litigation prevents the proper evaluation of potential conflicts of interest by obscuring who is behind the litigation. It also creates an environment that ties up defendants and courts in prolonged and costly legal battles.
“I’m here to make sure you know that this bill is important to the entire business community,” Emigholz said. “NJBIA represents thousands of businesses, small and large throughout the state, and we hear from them that New Jersey is too expensive. We hear from them that there’s too many regulations and it’s not easy to do business here. We also hear from them that our legal costs are excessive and it’s a problem for New Jersey’s business climate.”
Emigholz noted that the bill is a particular priority for the manufacturing sector.
“We want more things made in New Jersey, invented in New Jersey and researched and developed in New Jersey,” Emigholz said. “And the people that make those things might have potential liabilities and so transparency (about third-party funded litigation) will make it better for companies that want to invest here and create jobs here.”
The bill, S-4374, sponsored by Sen. John McKeon (D-27) and Sen. Joseph Lagana (D-38), was released with four affirmative votes and one abstention.