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Kennedy, Manchin introduce bipartisan Protecting Our Courts from Foreign Manipulation Act to end overseas meddling in U.S. litigation

September 18, 2023

Kennedy, Manchin introduce bipartisan Protecting Our Courts from Foreign Manipulation Act to end overseas meddling in U.S. litigation

Sen. John Kennedy (R-La.), a member of the Senate Judiciary committee, and Sen. Joe Manchin (D-W.Va.) today introduced the Protecting Our Courts from Foreign Manipulation Act of 2023 to stop foreign entities and governments from funding litigation in America’s courts.  “Leaving our courts unprotected from foreign influence—such as from China—poses a major risk to U.S. national security. The Protecting Our Courts from Foreign Manipulation Act would put necessary safeguards in place to ensure that foreign nations, private equity funds and sovereign wealth funds linked to hostile governments are not tipping the scale in federal courtrooms,” said Kennedy. “Foreign actors such as China and Russia use third-party litigation funding to support targeted lawsuits in the United States, undermining our economic and national security. This legislation would provide a commonsense strategy to protect our legal system by requiring greater transparency and accountability from third-party groups and preventing third-party litigation funding from foreign states and sovereign wealth funds. I urge Senators on both sides of the aisle to support this bipartisan bill to ensure that our federal courts are protected from foreign influence,” said Manchin.  Rep. Mike Johnson (R-La.) introduced companion legislation in the House of Representatives. “Foreign states and sovereign wealth funds should not meddle in our justice system. This bill prevents foreign actors like China from financing malicious lawsuits, protects critical industries and prioritizes the interests of Americans in court,” said Johnson.  Currently, foreign entities flood courts with billions of dollars in litigation financing in order to achieve a particular outcome in a case. Hostile foreign governments or companies that are connected with those governments could fund lawsuits in federal courts in order to achieve their geopolitical objectives and undermine America’s national security, especially by targeting proprietary commercial and military technology and exploiting U.S. disclosure requirements. The Protecting Our Courts from Foreign Manipulation Act would:
  • Require disclosure from any foreign person or entity participating in civil litigation as a third-party litigation funder in U.S. federal courts.
  • Ban sovereign wealth funds and foreign governments from participating in litigation finance as a third-party litigation funder, either directly or indirectly. 
  • Require the Department of Justice’s National Security Division to submit a report on foreign third-party litigation funding throughout the federal judiciary.
In January, Kennedy urged U.S. Supreme Court Chief Justice John Roberts and U.S. Attorney General Merrick Garland to take action in order to mitigate the threat foreign actors like China pose by covertly funding litigation in U.S. courts. “The U.S. Chamber of Commerce applauds Sens. John Kennedy (R-LA) and Joe Manchin (D-WV), and Rep. Mike Johnson (R-LA) for introducing this landmark bill, and we urge Congress to quickly pass it to protect consumers, businesses, and U.S. national and economic security,” said Harold Kim, President of the U.S. Chamber of Commerce Institute for Legal Reform. “The R Street Institute is excited to support and endorse Senator Kennedy’s legislation that will shine a light on the shadowy funders of third-party litigation, and limit the ability of foreign governments to negatively impact various U.S. industries by tying them up in anonymous third-party litigation. The current third-party litigation funding laws lack much needed transparency, and they could open the door to foreign entities detrimentally impacting our national security. We applaud the Senator for his leadership on this issue, and we urge more lawmakers to join him in this effort,” said Anthony Lamorena, Senior Federal Affairs Manager at the R Street Institute. Full text of the legislation is available here.
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Omni Bridgeway Secures EU Victory as Commission Declines Regulation

By John Freund |

Litigation funders scored a major win in Europe this week as the European Commission confirmed it will not pursue new regulations targeting third-party funding. In a decision delivered at the final session of the Commission's High-Level Forum on Justice for Growth, Commissioner Michael McGrath announced that the EU executive will instead focus its efforts on implementing the recently adopted Representative Actions Directive (RAD), which governs collective redress actions brought by consumers and investors.

An article in Law.com notes that the move is being hailed as a significant victory by litigation funders, particularly Omni Bridgeway. Kees de Visser, the firm's Chair of the EMEA Investment Committee, described the decision as a clear endorsement of the litigation funding model and a green light for continued expansion across European jurisdictions. Funders had grown increasingly concerned over the past year that the EU might impose strict rules or licensing requirements, following persistent lobbying by industry critics and certain member states.

Supporters of the Commission’s stance, including the International Legal Finance Association, argue that additional regulation would have harmed access to justice. They contend that third-party funding helps balance the playing field, especially in complex or high-cost litigation, by enabling smaller claimants to pursue valid claims that would otherwise be financially out of reach.

Although concerns around transparency and influence remain part of the wider policy debate, the EU’s current position sends a strong signal that existing legal tools and the RAD framework are sufficient to safeguard the public interest. For funders like Omni Bridgeway, this regulatory reprieve opens the door to deeper engagement in consumer and mass claims across the bloc.

Commercial

Daily Caller Slams Third Party Funding as Funders Face Mounting Media Attacks

By John Freund |

In a harsh opinion piecd, the conservative outlet The Daily Caller blasts third party litigation funding (TPLF), casting the practice as a “scam” that feeds frivolous lawsuits, burdens the economy, and unfairly enriches hidden investors at the expense of all Americans.

The op-ed, penned by Stephen Moore, draws a dire picture: trial lawyers allegedly “suck blood out of the economy” through class action suits that generate millions for attorneys but little for the plaintiffs. The piece points to numbers — a projected $500 billion hit annually to the U.S. economy, and tort cost growth more than double the inflation rate — to argue that the scale of litigation has outpaced any legitimate quest for justice.

Where TPLF comes in, according to Moore, is as the lubrication for what he sees as a booming lawsuit industry. He claims that unknown investors donate capital to lawsuits in exchange for outsized shares of any settlement, not the injured party. These hidden financial interests, he argues, distort the incentives for litigation, encouraging suits where there is no “real” corporate villain, a concern especially pointed at class action and litigation targeting major media or tech firms.

Moore cites roughly $2 billion in new financing arranged in 2024 and a fund pool of $16.1 billion total assets as evidence TPLF is growing rapidly. He endorses the Litigation Transparency Act, legislation introduced by Darrell Issa, which would require disclosure of such funding arrangements in federal civil cases. In Moore’s view, transparency would strip the “cloak of secrecy” from investors and curb what he describes as “jackpot justice,” lawsuits driven less by justice than by profit.

But the tone is unmistakably critical. Moore frames the practice as a parasitic industry that drains capital, discourages investment, and suppresses wages. He cites recent reforms in states like Florida under Ron DeSantis as evidence that limiting litigation can lead to lower insurance premiums and greater economic growth.

For legal funders, this op-ed and others like it underscore a growing media trend: skepticism not just of frivolous lawsuits but of the very model of third party funding. To preserve reputation and legitimacy, funders may need to do more than quietly finance cases. They may need to publicly engage, explain their business model, and advocate for regulatory standards that ensure transparency while preserving access to justice.

Commercial

Global Litigation Funding Thrives, Yet Regulation Still Looms

By John Freund |

The global litigation funding market is experiencing strong growth, yet lingering regulatory uncertainties continue to shadow its trajectory. According to the Chambers Global Practice Guide, the market was valued at approximately US $17.5 billion (AUD $26.9 billion) in March 2025 and is projected to surge to US $67.2 billion (AUD $103 billion) by 2037.

An article in LSJ states that major drivers of this expansion include rising legal costs, complex cross-border commercial litigation, and increased demand from small and mid-sized law firms seeking external funding to build out specialist teams. While funders embrace the growth opportunity, critics raise concerns around transparency, claimant autonomy, and potential conflicts of interest.

In Australia, a notable development occurred on 6 August 2025 when the High Court of Australia in Kain v R&B Investments Pty Ltd clarified that federal courts may make common fund or funding equalisation orders for the benefit of third-party funders (but not for solicitors) in class actions—except in Victoria, which still allows contingency fees. This decision is seen as a win for litigation funders, providing greater clarity across most Australian jurisdictions. Australia also saw regulatory reform in December 2022 when the Corporations Amendment (Litigation Funding) Regulations came into force, exempting litigation funding schemes from the MIS/AFSL regime under specific conditions and emphasising the mitigation of conflicts of interest as a compliance feature.

On the regulatory front, the Australian Securities and Investments Commission (ASIC) is considering extending relief instruments that exempt certain litigation funding arrangements from the National Credit Code and financial services licensing until March 2030. Meanwhile in the UK, the proposed Litigation Funding Agreements (Enforceability) Bill 2024 seeks to remove the classification of third-party funding agreements as “damages-based agreements” under the Courts & Legal Services Act – a move which proponents say will enable greater access to justice and clear the path for global funders.