Requires disclosure of third-party litigation funding agreements and establishes certain responsibilities for litigation funders.

A2159 2R

[Second Reprint]

ASSEMBLY, No. 2159

STATE OF NEW JERSEY

222nd LEGISLATURE

�

PRE-FILED FOR INTRODUCTION IN THE 2026 SESSION

Sponsored by:

Assemblywoman ELIANA PINTOR MARIN

District 29 (Essex and Hudson)

Assemblywoman ELLEN J. PARK

District 37 (Bergen)

Assemblywoman� HEATHER SIMMONS

District 3 (Cumberland, Gloucester and Salem)

Assemblyman� STERLEY S. STANLEY

District 18 (Middlesex)

Co-Sponsored by:

Assemblymen Spearman and Kearney

SYNOPSIS

���� Requires disclosure of third-party litigation funding
agreements and establishes certain responsibilities for litigation funders.

CURRENT VERSION OF TEXT

���� As reported by the Assembly Oversight, Reform and
Federal Relations Committee on June 15, 2026, with amendments.

��

An Act

concerning third-party litigation funding
agreements and supplementing Title 2A of the Revised Statutes.

����
Be It
Enacted
by the Senate and General Assembly of
the State of New Jersey:

����� 1.�� As
used in this act:

�����
1
�Administrative action� means any administrative
proceeding brought before an executive branch agency or administrative tribunal
of this State, except for workers� compensation claims.
1

����� �Court�
means
2
[
any court, agency, or tribunal
]

the Superior Court of New Jersey
2
in which a civil action is brought.

����� �Civil
action� means
1
[
:

����� a.
any form of civil action;

����� b.
an alternative dispute resolution proceeding; and

����� c.
an administrative proceeding before an agency of this State, except for
workers� compensation claims.
]

any action where a complaint is filed in the Civil part of the Law
Division of the Superior Court of this State
2
[
, except for workers� compensation claims
]
2
.
1

����� �Litigation
expenses� means costs incurred to pursue a civil
1
or administrative
1

action,
including, but not limited to, court costs, filing fees, attorneys� fees,
expert witness fees, travel expenses, and expenses related to identifying or
soliciting potential clients to participate in the litigation before, during,
or after filing or resolving the civil action.

����� �Litigation
funder� means a person or entity that enters a litigation funding agreement or
any person or entity who has a direct or indirect right to receive compensation
from the agreement. A litigation funder shall not include:

����� a.
a parent, sibling, spouse, grandparent, grandchild, or child related by blood,
adoption, or marriage of the party being funded;

����� b.
an attorney who, at the time money is provided to or on behalf of a client
under a litigation funding agreement, has an attorney-client relationship with
the party concerning the party�s civil
1
or administrative
1

action;

����� c.
a licensed or registered financial institution that does not receive, in
consideration for loaning money to any person, a right to receive payment from
the value of any proceeds or other consideration realized from any judgment,
award, settlement, verdict, or other form of monetary relief any person may
receive or recover in relation to any civil
1
or administrative
1

action;

����� d.
a nonprofit entity that provides pro bono legal services to the party with no
right to receive payment from the amount of any judgment, award, settlement,
verdict, or other form of monetary compensation obtained in the civil
1
or administrative
1

action.
1
[
Court ordered awards of costs or attorney fees
]

Awards
of costs or attorney fees ordered by a court, executive branch agency, or a
tribunal
1

to nonprofit legal organizations shall not be
affected by this section; or

����� e.��
2
[
a person or entity that provides money to a party to
litigation solely for purposes other than funding litigation expenses
]

a person or entity that provides money to a
plaintiff to litigation solely for purposes of the plaintiff�s personal or
family needs and not for purposes of legal filings, legal document preparation
and drafting, appeals, creation of litigation strategy, drafting testimony and
expenses directly related to the prosecution of the litigation
2
.

����� �Litigation
funding agreement� means, with respect to any civil
1
or administrative
1

action or
group of civil
1
or
administrative
1

actions, any written agreement:

����� a.
whereby a third party agrees to provide funds to one of the named parties, or
any law firm affiliated with the action or group of civil
1
or administrative
1

actions;
and

����� b.
which creates a direct or collateralized interest in the proceeds of a civil
1
or administrative
1

action or
group of civil
1
or
administrative
1

actions, by settlement, verdict, judgment or
otherwise, and whose interest is based, in whole or in part, on a funding-based
obligation to the action or group of actions or the appearing counsel or any
contractual co-counsel or the law firms of the counsel or co-counsel executed
with:

����� (1)
any attorney representing a party;

����� (2)
any co-counsel in the litigation with a contingent fee interest in the
representation of that party; or

����� (3)
any third-party who has a collateral-based interest in the contingency fees of
the counsel or co-counsel firm related in whole or part to the fees derived
from representing that party

�����
1
�Pre-settlement funding� means funding solely
intended to pay costs of living or other personal or familial expenses during
the pendency of a civil or administrative action where those funds are not used
to defray litigation expenses.
1

����
1
[
2. a.� In any
civil action, except as otherwise stipulated by the parties or ordered by a
court, a party or party�s attorney shall, without awaiting a discovery request,
provide the court and all parties with any litigation funding agreement with
respect to the action.

���� b.��� Disclosure of a
litigation funding agreement required by subsection a. of this section shall
include all correspondence, documents, or other statements that comprise the
agreement and shall be made at the time of the filing of an initial pleading or
at the time of the agreement, if the agreement occurs after the initial
pleading. Any amendment to a litigation funding agreement disclosed pursuant to
subsection a. of this section shall be provided to the court and all parties at
the time the amendment is made.

���� c.��� In addition to the
disclosures required by this section, the participants or parties to any
litigation funding agreement and the nature of that investment or arrangement shall
be permissible subjects for discovery in any civil action.

���� d.��� The court shall
determine sanctions for any party that fails to make the disclosures required
by this section. An evasive or incomplete disclosure shall be treated as
failure to make the disclosure.

���� e.��� This section shall not
require disclosure of a contingent fee agreement entered into by a party and
the party�s legal representative in a civil action.
]
1

�����
1
2. a.�
A party

2
[
to any civil action
]

or attorney that enters into a litigation
funding agreement
2

shall provide

2
notice of the litigation funding agreement
2

to the
court

2
[
, for in camera review, any litigation funding
agreement
]

in writing
2

within 30 days after the commencement of a civil
action or

2
if such agreement is executed after commencement of
a civil action within
2

30 days

2
[
after
]

of
2

the execution of a litigation funding agreement
2
[
, whichever is later
]
.�
Copies
of this notice shall be provided to all parties.� At any time after receiving
this notice, a party may request that the court conduct an in camera review of
the litigation funding agreement.
2

�����
b.�� A
party may seek discovery of the terms of an agreement with a litigation funder,
including the litigation funding agreement, upon a showing that:

�����
(1) the
funding arrangement is relevant to the claims or defenses of the party;

�����
(2)
� 2
prima facie evidence that
2

a
litigation funder

2
[
may have
]
2
engaged in conduct that violates section 3 or 4 of
this act; or

�����
(3)

other

2
[
good
]
2

cause

2
, by clear and convincing evidence
2
.

�����
2
[
c.����������� Nothing in this section precludes a
court from ordering such other relief as may be appropriate.
1
]
2

���� 3.
a. A litigation funder shall have a fiduciary duty to a party in a
civil action if it has provided litigation funding to that civil
1
or
administrative
1

action.

���� b.
A litigation funder shall not engage in any act, practice, or course of
business that is inconsistent with the funder�s fiduciary duty pursuant
to subsection a. of this section.

���� c.
A litigation funder shall
1
agree
as a condition of providing funding to
1

be jointly liable for any award or order imposing or
assessing costs or monetary sanctions against
1
[
a funded
]

the
1
party
1
whose civil or administrative claims is subject to the
funding agreement
1
or
1
[
funded
]

the
1

party�s
attorney arising from or relating
to the funded civil
1
or
administrative
1

action.

���� 4.
It shall be prohibited for a litigation funder to engage in the following
conduct:

���� a.
influence, make, or overturn a decision relating to the initiation, conduct,
settlement, or resolution of the underlying civil
1
or
administrative
1
action, the power of which shall remain solely with the
party and attorney handling the action for the party;

���� b.
offer to provide or provide legal advice to a
1
[
funded
]
1
party or party�s attorney, or identify, recommend, or
select a
1
[
funded
]
1
party�s attorney;

���� c.
attempt to secure a remedy or obtain a waiver of any remedy, including but not
limited to compensatory, statutory, or punitive damages, that a party to a
civil
1
or
administrative
1
action
may or may not be entitled to pursue or otherwise
recover;

���� d.
receive or recover any payment that exceeds 25 percent of the amount of any
settlement, judgment, award, or other monetary relief obtained as a result
of the civil
1
or
administrative
1

action that is the subject of the litigation funding
agreement. Absent express consent of the funded party or funded parties to the
litigation, the combined payment to the litigation funder and fee to the
attorney of a funded party shall not exceed 50 percent of the monetary relief
obtained as a result of the civil
1
or administrative
1

action; or

���� e.
assign, including securitizing, a litigation funding agreement in whole or in
part.

���� 5.��� a.
A litigation funding agreement shall be unenforceable by the litigation
funder or any successor-in-interest to the litigation funding agreement if the
funder has engaged in conduct that violates sections 3 or 4 of this act.

���� b.
A court
1
,
executive branch agency, or a tribunal
1
may, upon a motion of a party to litigation funded through
a litigation funding agreement or sua sponte, find that a litigation
funding agreement, or a provision thereof, violates this act and is
unenforceable.

���� c.
A violation of sections 3 or 4 of this act shall constitute an unfair
or deceptive act or practice and shall be a violation of P.L.1960, c.39
(C.56:8-1 et seq.).

���� d.
A court
1
,
executive branch agency, or a tribunal
1
may impose sanctions, in addition to any remedy otherwise
available, for noncompliance with any provision of this act.

�����
1
6. Nothing in this act shall apply to pre-settlement
funding obtained by an individual who is a party to a civil or administrative
action.
1

����
1
[
6.
]
�
7.
1
��� This
act shall take effect on the 90th day next following enactment and shall apply
to litigation funding agreements entered into on or after that date.