A court filing in the bankruptcy of Montgomery-based Jackson Hospital reveals that, under a joint prosecution and funding agreement, litigation funders and lawyers would be paid ahead of the hospital itself if its lawsuit against Blue Cross and Blue Shield of Alabama produces a settlement. The arrangement offers an unusually clear public window into how a funded litigation recovery can be distributed.

As reported by Alabama Daily News, Jackson Hospital filed for bankruptcy and sued Blue Cross, arguing that only higher insurance reimbursement rates can keep the facility open. Its current operations are financed through a debtor-in-possession loan from Jackson Investment Group (JIG).

According to the agreement, any settlement proceeds would follow a strict waterfall: first, JIG's legal expenses; second, repayment of JIG's investment, including accrued and unpaid interest; and only then a split of what remains, with 70% directed to Jackson Hospital Corporation for its obligations to JIG and 30% to a nonprofit of JIG's choosing. The hospital itself effectively ranks third in the payment hierarchy.

The structure highlights a recurring tension in litigation finance: a courtroom victory does not always translate into the outcome a funded party most needs — here, the survival of the hospital. U.S. Bankruptcy Judge Christopher Hawkins has scheduled a status hearing for June 30, leaving the ultimate distribution, and the hospital's future, unresolved.

As New York's new consumer litigation lending law takes effect, a Buffalo-based nonprofit is positioning itself as an alternative to the traditional, for-profit funding model the legislation is designed to rein in. The Milestone Foundation, backed by a newly formed advisory council and a client base of roughly 1,000, says its approach is built around reshaping how plaintiffs access funds while their cases are pending.

As reported by Law.com, the foundation is seeking to differentiate itself from conventional consumer litigation lenders, which advance cash to plaintiffs in personal injury and other cases in exchange for a share of any eventual recovery. Critics of that model have long argued that compounding fees can consume an outsized portion of a plaintiff's award, a concern that helped drive New York's move toward tighter regulation.

The timing is notable. New York's law arrives amid a broader national reckoning over consumer legal funding, with several states weighing disclosure requirements, rate caps, and other guardrails on the practice. By advancing a nonprofit alternative as the regulatory landscape shifts, the Milestone Foundation is testing whether a mission-driven structure can coexist with — and compete against — established commercial funders.

The development underscores how regulation and market innovation are increasingly moving in tandem within consumer legal funding. For plaintiffs, lawyers, and funders alike, New York's experience may offer an early indication of how alternative models perform once stricter rules are in place.

A new comment letter to the Advisory Committee on Civil Rules contends that third-party litigation funding (TPLF) agreements do not automatically qualify for protection under the attorney-client privilege or the work-product doctrine — directly challenging one of the funding industry's central objections to a federal rule mandating disclosure.

According to AskAboutTPLF, an initiative of Lawyers for Civil Justice, the letter was authored by Bradley partner and privilege specialist Todd Presnell, who takes no position on whether a disclosure rule should be adopted. Presnell argues that TPLF agreements fail all four requirements needed to trigger attorney-client privilege: they are not communications, they are not between a client and lawyer, they lack confidentiality because funders are not parties to the litigation, and they do not contain legal advice or strategy. On that basis, he writes that he does "not perceive the attorney-client privilege or work-product doctrine as a barrier to adopting a mandatory-disclosure rule."

Two recent rulings are cited as support. In *Entangled Media, LLC v. Dropbox Inc.* (N.D. Cal., April 13, 2026), a court permitted a funded plaintiff to seal specific financial terms after in camera review while ordering production of the remainder of the agreement. In *A Co. Hungary KFT v. Bespalov* (Cal. App. 2d Dist., April 22, 2026), an appellate court affirmed $8,000 in sanctions against a judgment debtor who asserted work-product privilege as a blanket objection, holding that privilege claims over funding records must be made document by document.

The campaign argues these cases show courts already redact, seal, and log privileged materials routinely, and that TPLF agreements require no different treatment.

North Carolina has become the first state in the nation to enact an outright ban on third-party litigation funding, after Governor Josh Stein signed House Bill 315 into law. The measure makes it unlawful for outside investors to finance civil lawsuits in exchange for a financial interest tied to the outcome of the case, marking a significant departure from the disclosure-and-transparency approach adopted by other states.

As reported by WWAY-TV3, the law defines litigation investment as providing money for the fees, costs, or expenses of pending or potential civil proceedings in return for compensation contingent on the result. The statute authorizes the state attorney general to seek injunctions and civil penalties against violators, though certain activities are carved out from the prohibition.

The bill drew broad legislative support, passing the House unanimously and clearing the Senate by a 45-1 margin. Business groups, including the North Carolina Chamber and the U.S. Chamber of Commerce's Institute for Legal Reform, backed the measure, arguing it strengthens the state's legal and business climate. Critics counter that third-party funding can expand access to the courts for parties who otherwise lack the resources to pursue meritorious claims.

The development represents a notable escalation in the regulatory debate over litigation finance in the United States. While states such as Ohio and others have advanced transparency requirements, North Carolina's outright prohibition sets a new precedent that funders, defense interests, and legislators in other jurisdictions are likely to watch closely.

A coalition of 21 organizations led by the American Energy Alliance (AEA) has called on congressional leaders to close a tax provision that allows third-party litigation financiers to treat their profits as capital gains rather than ordinary income. The group argues the loophole enables foreign investors to extract effectively tax-free returns from U.S. court outcomes, with the American energy sector squarely in the crosshairs.

According to the American Energy Alliance, the letter was sent on June 22 to House Speaker Mike Johnson, Senate Majority Leader John Thune, and the tax-writing committees in both chambers. The coalition contends that foreign sovereign wealth funds and geopolitical rivals have deployed substantial capital into U.S. energy-related litigation, creating national security vulnerabilities through undisclosed financing arrangements.

"Foreign nationals and foreign corporations with no U.S. presence pay no U.S. withholding tax on these gains," said AEA President Tom Pyle. The letter frames third-party litigation funding as a high-yield alternative asset class and warns that foreign entities are weaponizing it in disputes over climate claims, intellectual property, mergers, and environmental regulation.

The campaign reflects the growing convergence of litigation finance, tax policy, and national security in Washington. While the letter does not cite a specific bill, its focus on capital gains treatment signals that funders' tax positions — long a secondary concern in the disclosure debate — are emerging as a distinct front in the broader fight over third-party funding.

Irwell Insurance Company has agreed a five-year capacity partnership with managing general agent Addept Insurance Services, significantly expanding the legal expenses insurance (LEI) capacity available to the UK specialist. The deal builds on an arrangement first struck in April 2025 and is designed to give Addept longer-term planning stability as demand for LEI cover accelerates.

As reported by Insurance Business, the expanded capacity will allow Addept to underwrite a greater volume of business, though financial terms were not disclosed. "Securing strong, quality capacity is a key strategic priority to maintain our pace of growth," said Addept managing director Richard Finan. Irwell chief executive Giles Reading said the partnership is focused on "delivering products that offer fair value to policyholders."

The agreement comes against a backdrop of mounting pressure on the UK's employment tribunal system. Caseloads reached 68,192 at the end of January 2026 — a nearly 50% year-on-year increase — while total outstanding claims now exceed 500,000 and disposals have fallen by roughly 20% over the same period.

Sweeping legislative changes are expected to drive claim volumes higher still. The Employment Rights Act 2025 will extend the claim time limit from three to six months in October 2026, and from January 2027 the qualifying period for unfair dismissal claims will drop from two years to six months, with the compensation cap removed. For LEI providers, the reforms point to sustained demand — and a growing need for the kind of durable underwriting capacity the Irwell-Addept deal is intended to supply.

The Ohio Senate has passed House Bill 105, advancing what supporters describe as one of the most comprehensive third-party litigation funding measures in the country and sending it to Governor Mike DeWine for signature. The legislation targets what its sponsors call an opaque, billion-dollar industry in which anonymous or foreign actors can shape the course of American lawsuits without disclosure.

According to the Ohio House of Representatives, the bill requires parties to disclose the existence of litigation funding agreements to others in a case and bars the sharing of confidential court documents with funders. Sponsored by Reps. Meredith Craig and Jim Thomas, HB 105 would also require both consumer legal funding companies and commercial litigation financiers to register with the Ohio Attorney General before operating in the state, including disclosures about their leadership and affiliations.

The measure goes further than disclosure alone. It prohibits funders from influencing counsel selection, litigation strategy, or settlement decisions, and bars them from paying referral fees to attorneys. In a provision drawing national attention, the bill also restricts any foreign government, foreign corporation, or foreign investor from participating in third-party litigation funding within the state.

Business groups, including small-business advocates, have praised the bill as overdue transparency reform, while critics warn it could chill legitimate access to capital for plaintiffs. With the legislation now before Governor DeWine, Ohio is positioned to become an early bellwether for how aggressively states will regulate litigation finance.

A senior English costs judge has struck out a law firm's entire £30,000 success fee after finding that the firm failed to make reasonable inquiries into its client's existing legal expenses insurance before signing him to a conditional fee agreement. The ruling is a pointed reminder of the diligence funders and firms must exercise around pre-existing coverage before committing a client to risk-based financing.

As reported by Legal Futures, the case, Evans v Fletchers, arose from a 2017 motorcycle accident. The claimant, Peter Evans, had legal expenses insurance through his Zurich home policy, yet the firm took out after-the-event insurance and did not seriously investigate the existing cover until 2019. The claim settled in 2021 for £250,000 plus costs, and the firm billed £61,615, including a £30,365 success fee capped at 25% of damages.

Senior Costs Judge Jason Rowley disallowed the success fee in full, calling the firm's "desultory enquiries" fundamentally inadequate. He noted that specialist personal injury solicitors should have known the legal expenses insurer often differs from the home insurer, that inquiries made two years after the accident demanded greater diligence, and that the correspondence appeared designed to discourage a useful response. A competing firm, he observed, had easily identified the actual insurer.

The decision underscores that since success fees became largely unrecoverable after 2013, courts expect rigorous investigation of available "before-the-event" cover — a discipline with direct implications for how litigation is financed in the UK.