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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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Commercial Fundraising

Cartiga’s $540M SPAC with Alchemy

By John Freund |

Cartiga, a long-standing player in consumer and attorney funding, is heading to the public markets. The company agreed to combine with Alchemy Investments Acquisition Corp. 1 in a transaction pegged at $540 million in equity consideration, positioning the platform to scale its data-driven approach to underwriting and portfolio management. Management frames the move as about reach and efficiency: tapping a listed currency, broadening investor access to the asset class, and accelerating inorganic growth.

An article in MarketWatch reports that the proposed business combination would take Cartiga public via Alchemy’s SPAC, with the parties emphasizing how a listing could support growth initiatives and acquisitions. The piece notes the strategic rationale—public-market transparency and capital flexibility—as the platform seeks to deepen its footprint in funding for legal claims and law firms.

While final timing remains subject to customary steps (including the shareholder vote and regulatory filings), the announcement marks one of the most significant U.S. litigation-finance capital-markets events of the year.

Cartiga’s trajectory reflects a broader institutionalization of legal finance: more data, more discipline, and more diversified funding channels. The company’s model—providing non-recourse advances to plaintiffs and working capital to law firms—relies on proprietary analytics and scale to manage risk and returns across cycles. A public listing, if completed, would put Cartiga alongside other listed peers globally and provide investors with another pure-play exposure to the asset class’s uncorrelated return profile.

Commercial Deals

Omni Bridgeway Highlights Dispute Finance as Strategic PE Value Driver

By John Freund |

Private equity (PE) firms often view legal disputes involving portfolio companies as liabilities—not opportunities for value creation. However, in a recent blog post, Omni Bridgeway argues that when properly modeled and leveraged, dispute finance can unlock hidden value throughout a PE investment lifecycle.

An article on Omni Bridgeway’s website explains that dispute finance enables PE firms to convert uncertain legal claims into a probability‑weighted, risk‑adjusted net present value (NPV), which can be used as a powerful negotiating lever in acquisitions. The firm illustrates this with an example: a $10 million litigation claim, after probabilistic weighting, legal cost deductions, and discounting, yields a risk‑adjusted NPV of roughly $3.5 million—highlighting how firms can avoid overpaying for speculative legal value

Once the investment is underway, dispute finance can preserve EBITDA by funding legal costs outside the P&L, since such non‑recourse financing isn’t treated as an SG&A expense or recorded as debt. Omni Bridgeway demonstrates that a $2 million litigation expense can be eliminated from SG&A, boosting EBITDA from, say, $11 million to $13 million.

As dispute finance becomes more accepted in M&A workflows, funders that offer robust valuation frameworks and flexible, non‑recourse instruments may gain a competitive edge. Overall, Omni Bridgeway’s post highlights that monetising legal claims—through non‑recourse capital advances or outright sale to a funder—can free up liquidity for operational initiatives without increasing downside risk.

Announcements Commercial Fundraising

New North Litigation Capital Launches, Backed by £50 Million in Senior Secured Financing from Pollen Street Capital

By John Freund |

Pollen Street Capital ("Pollen Street") today announces a new senior secured credit facility of up to £50 million to New North Litigation Capital (“New North”). New North is a commercial litigation finance company and a direct subsidiary of Capital Law, a Cardiff based law firm founded in 2006.

Capital Law has a strong track record in commercial litigation, having closed over 400 claimant cases since 2001 with a 95% win rate. Drawing on its senior leadership and experienced disputes team, Capital Law launched New North to address the underserved small to mid-market segment of commercial litigation market. 

New North will be the only litigation financier in the UK owned and operated by practicing lawyers, bringing their day to day lived experience of handling mid-market litigation into pricing the risk and the funding investment decisions.

Christopher Nott, Founder and CEO of New North commented: “We are pleased to work with Pollen Street on this financing to launch New North Litigation Capital. The funding supports us to bridge a critical gap by funding claims that are often deemed too small by other players in the market. We are excited to work with the Pollen Street team as we create this new kind of litigation funding.”

Connor Marshall-Mckie, Investment Director at Pollen Street, commented: “New North addresses an important gap in the litigation funding space, focusing on smaller mid-market commercial litigation. With the significant opportunity available and the deep experience of the leadership team from Capital Law we are excited to partner with the team to support their growth.”

About Pollen Street

Pollen Street is a fast-growing and high-performing private capital asset manager. Established in 2013, the firm has built deep capability across the real estate, financial and business services sectors aligned with mega-trends shaping the future of the industry. Pollen Street manages over €7bn AUM across private equity and credit strategies on behalf of investors including leading public and corporate pension funds, insurance companies, sovereign wealth funds, endowments and foundations, asset managers, banks, and family offices from around the world. Pollen Street has a team of over 95 professionals.