Trending Now
  • Equal Justice Under the Law: Why Access to Justice Must Include the Ability to Wait for Justice
Commercial Regulatory Issues

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.

Commercial

View All
Commercial

Legal-Bay Urges Caution on Quick-Pay Option in Proposed $800 Million Archdiocese of New York Settlement

Pre-settlement funder Legal-Bay has welcomed the proposed $800 million abuse settlement involving the Archdiocese of New York while warning claimants that the plan's fast-track payment option may undervalue their claims.

As reported by The Mountaineer, the proposal would be paid in two installments — roughly $615 million up front and a further $185 million within about 15 months — covering an estimated 1,300 claims brought under New York's Child Victims Act. Claimants would be able to accept a flat quick-pay amount of $250,000 or submit to an individual evaluation under a points-based matrix that has not yet been released publicly.

Legal-Bay chief executive Chris Janish said the figure represents meaningful progress. "For survivors who have waited years to be heard, an $800 million proposal is an important step toward resolution," he said. He cautioned, however, that the quick-pay election may not deliver fair value for claimants whose circumstances would score higher under individual review, and noted that the matrix remains unpublished, leaving claimants to weigh a certain sum against an unknown alternative.

Janish added that non-recourse funding advances can help plaintiffs avoid accepting an early payment for liquidity reasons alone. Legal-Bay provides pre-settlement advances that are repaid only if the underlying claim resolves successfully.

The company has tracked the Archdiocese proceedings closely, having flagged in April that the case had reached what it described as a critical crossroads for claimants awaiting resolution.

Commercial

Aperture Portfolio Manager Says Litigation Finance Has Reached an Institutional Inflection Point

Litigation finance is moving from a niche alternative allocation to a recognised corner of specialty private credit, according to Luke Darkow, a portfolio manager at Aperture Investors.

As reported by ABF Journal, Darkow argues that institutional investors are no longer treating legal assets as an exotic curiosity but as a potential source of returns uncorrelated with public markets. "Litigation finance is no longer merely an alternative curiosity," he writes. "It is increasingly viewed as a potential diversifier within their current portfolios."

The case rests partly on the sheer size of the underlying market. U.S. legal services generated roughly $375.7 billion in revenue in 2024 and are projected to reach $427.9 billion by 2029, a compound annual growth rate of 2.64%. Darkow, who says he has personally deployed more than $1.25 billion into litigation finance over his career, frames that spend as a large and persistent financing need rather than a cyclical opportunity.

Aperture's own approach is built around lending to law firms rather than backing individual cases. The firm structures direct loans secured by diversified pools of legal fee receivables, blending post-settlement receivables with near-settlement matters. Darkow contends that this structure reduces the binary outcome risk that has historically made single-case investments difficult for institutional allocators to underwrite, because repayment depends on the performance of a portfolio of claims rather than one verdict.

Aperture, which reported roughly $600 million in litigation finance assets under management earlier this year, is among a group of credit managers positioning law firm lending as a distinct private credit strategy.

Commercial

New York’s Usury Cap Still Shadows Litigation Funders Despite the State’s New Consumer Funding Statute

New York's new consumer litigation funding statute has not removed the risk that a funding agreement will be recharacterised as a usurious loan, according to a commentary published this week by three lawyers at Glenn Agre Bergman & Fuentes.

As reported by Bloomberg Law, partners Reid Skibell and Joseph Gallagher, with associate Colleen Piasenti, argue that the Consumer Litigation Funding Act — effective 17 June 2026 — gives funders a statutory framework but not a safe harbour. The Act defines consumer litigation funding as non-recourse and caps the funder's total recovery at 25% of the claimant's proceeds. Non-recourse treatment is what keeps a funding agreement outside New York's 16% civil usury ceiling, and the authors contend that courts will look past the label to the economics of the deal.

They point to the July 2026 decision in *Denemark v. New Chapter Capital, Inc.* as the cautionary example. There, a funder advanced legal fees to a party in a matrimonial dispute at a stated 12% interest rate, secured by a UCC-1 lien on marital property and supported by a guaranty that triggered repayment if the spouses reconciled or if either spouse died. The court concluded the structure left the funder recovering in virtually every realistic scenario, making the arrangement a loan in substance at an effective rate of roughly 19%, and voided it.

The practical lesson, the authors suggest, is that risk-reduction devices meant to protect a funder's downside can be the very features that strip away non-recourse status.