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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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Five Years On, Arizona’s ABS Data Shows No Systemic Ethical Breakdown, Article Argues

An article published in the Arizona State University Corporate and Business Law Journal argues that five years of operating data under Arizona's Alternative Business Structure framework has not produced the ethical failures its opponents predicted, and that the debate is moving from theoretical objections to observable outcomes.

Writing in the ASU Corporate and Business Law Journal, Alex Chucri traces the framework to August 2020, when Arizona became the first state to eliminate ABA Model Rule 5.4 and permit non-lawyer ownership of law firms, with the ABS regime taking effect on January 1, 2021 under Arizona Supreme Court order R-20-0034. The central claim is structural: the state did not remove oversight so much as replace blanket prohibition with licensing, compliance obligations and regulatory accountability. Non-lawyers may hold equity, share profits and participate in management, but only under Supreme Court supervision, with approved compliance counsel, reporting procedures and audit requirements.

The article marshals the program's numbers. Licenses grew from two approvals in 2020 to 15 in 2021 and 25 in each of 2022 and 2023, reaching approximately 150 licensed entities by March 2026, with 114 ABSs actively operating during 2024. No ethics complaints were filed against ABS entities in the program's first three years; the first arrived in 2024, when the State Bar initiated disciplinary action involving two ABS-affiliated attorneys. A preliminary analysis of 2024 disciplinary actions, which the author acknowledges is limited by incomplete ABS staffing data, suggests ABS-affiliated lawyers faced discipline at a rate well below the broader Arizona attorney population.

Readers should weigh the source. Chucri is founder and CEO of Pravati Capital and in 2024 founded 1787 Legal Group, the Scottsdale ABS the article offers as its case in point. The argument nonetheless lands at a moment when several states, Illinois among them this week, are moving in the opposite direction, and Arizona remains the only jurisdiction with a five-year record to argue from.

Commercial

IVO Capital Partners’ Michael Israel Named Fund Manager of the Month

Michael Israel, chairman and co-founder of IVO Capital Partners, has been named Fund Manager of the Month by RankiaPro, in a profile that traces his path from Paribas and Merrill Lynch to building one of Europe's more active litigation finance investors.

As reported by RankiaPro, Israel founded IVO Capital with Sidney Oury in 2012 following the Lehman Brothers collapse, which he describes as the defining moment of his career. He manages the funds in the IVO range and sits on the investment committee for the firm's litigation finance funds. The Paris-based manager oversees approximately €1.3 billion across listed credit and private credit, with litigation finance and venture debt forming the private side of the book.

The interview is largely a general reflection on investing rather than a litigation finance discussion, but Israel's framing carries over to how IVO approaches the asset class. He describes the cornerstone of the firm's method as an asymmetry lens, consistently assessing how much can be made against how much can be lost and under what scenarios, and highlights strategic importance as an underappreciated form of downside protection. He also argues the industry's principal edge lies less in analysis than in the willingness to act and then continuously reassess.

IVO has been visible in the sector over the past year. The firm launched IVO Legal Strategies Fund IV targeting €150 million, backed a €673 million Dutch consumer claim against Netflix over pricing practices, and joined both the European Litigation Funders Association and the International Legal Finance Association.

The recognition is a mainstream asset management outlet treating a litigation finance allocator as a credit manager, which is roughly the positioning European funders have been working toward.

Commercial

Investment Note Argues Omni Bridgeway Is Undervalued After Sector Reset

An investment commentary published this week makes the case that Omni Bridgeway's shares do not reflect the quality of its legal assets platform, following a broad repricing across the litigation finance sector.

As reported by Livewire Markets, the piece characterises the ASX-listed company as a fund manager operating in a unique and high-returning asset class, argues that valuation support is clear at current levels, and points to a final close on fund raising expected during August as a near-term catalyst.

The argument rests on operating results the company disclosed at the end of July. Omni Bridgeway reported record FY26 new conditional and unconditional commitments of A$712.2 million across 43 new investments, roughly 38% above FY25, alongside record cash investment proceeds. The company has spent recent years shifting from a balance sheet funder to a manager of third-party capital, a transition given its clearest expression in the A$320 million secondary market transaction with Ares Management completed last year.

The sector reset referenced in the note has been visible across listed funders through 2026, with Burford absorbing a $2.4 billion write-down tied to the YPF reversal and Litigation Capital Management working through covenant waivers. Investors have applied that scepticism broadly, including to managers whose economics depend on fee income from committed funds rather than on outcomes in individual matters.

Whether that distinction gets recognised in pricing is the open question, and the completion of the current fundraising will supply a concrete test of institutional appetite at a moment when the asset class is being reassessed.