A 2159 — Requires disclosure of third-party litigation funding agreements and establishes certain responsibilities for litigation funders.

A2159 1R2R [First[Second Reprint] ASSEMBLY, No.

PARK District 37 (Bergen)  Assemblywoman  Co-SponsoredHEATHER by:SIMMONS District 3 (Cumberland, Gloucester and Salem) Assemblyman  STERLEY S.

STANLEY District 18 (Middlesex)   Co-Sponsored by:

  CURRENT VERSION OF TEXT      As reported by the Assembly FinancialOversight, InstitutionsReform and InsuranceFederal Relations Committee on June 4,15, 2026, with amendments.

      1“Administrative action” means any administrative proceeding brought before an executive branch agency or administrative tribunal of this State, except for workers’ compensation claims.claims.1       “Court” means 2[any court, agency, or tribunal] the Superior Court of New Jersey2 in which a civil action is brought.        “Civil action” means1[:

1      “Court”a.     means any court,form agency,of orcivil tribunalaction;  in      whichb.    aan civilalternative actiondispute isresolution brought. proceeding; “Civil action” means1[:

    and  a.          c.     an administrative proceeding before an agency of this State, except for workers’ compensation claims.] any formaction where a complaint is filed in the Civil part of the Law Division of the Superior Court of this State2[, except for workers’ compensation claims]2.1       “Litigation expenses” means costs incurred to pursue a civil action; 1or     administrative1 b.   action, anincluding, alternativebut disputenot resolutionlimited proceeding;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.

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, except for workers’ compensation claims.1 “Litigation expenses”funder” means costs incurred to pursue a civilperson 1oror administrative1entity action,that including,enters buta notlitigation limitedfunding to,agreement courtor costs,any filingperson fees,or attorneys’entity fees,who experthas witnessa fees,direct travel expenses, and expenses related to identifying or solicitingindirect potentialright clients to participatereceive incompensation thefrom litigation before, during, or after filing or resolving the civilagreement. action.

 “LitigationA funder”litigation meansfunder shall not include:        a.     a personparent, sibling, spouse, grandparent, grandchild, or entitychild thatrelated entersby 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 agreementagreement, has an attorney-client relationship with the party concerning the party’s civil 1or administrative1 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 entityrecover whoin hasrelation to any civil 1or administrative1 action;        d.    a directnonprofit orentity indirectthat provides pro bono legal services to the party with no right to receive compensationpayment from the agreement.amount of any judgment, award, settlement, verdict, or other form of monetary compensation obtained in the civil 1or administrative1 action.

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 1or administrative1 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 1or administrative1 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 1or administrative1 action.

or            e.   e.   a2[a person or entity that provides money to a party to litigation solely for purposes other than funding litigation expenses. 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 litigation2.        “Litigation funding agreement” means, with respect to any civil 1or administrative1 action or group of civil 1or administrative1 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 1or administrative1 actions;

and            b.    which creates a direct or collateralized interest in the proceeds of a civil 1or administrative1 action or group of civil 1or administrative1 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.

     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             12.  12. a.  A party to any civil action shall provide to the court, for in camera review, any litigation funding agreement within 30 days after the commencement of a civil action or 30 days after the execution of a litigation funding agreement, whichever is later.

    a.  b.   A party 2[to any civil action] or attorney that enters into a litigation funding agreement2 shall provide 2notice of the litigation funding agreement2 to the court 2[, for in camera review, any litigation funding agreement] in writing2 within 30 days after the commencement of a civil action or 2if such agreement is executed after commencement of a civil action within2 30 days 2[after] of2 the execution of a litigation funding agreement2[, 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) (1) the funding arrangement is relevant to the claims or defenses of the party;

          (2)  2prima facie evidence that2 a litigation funder may2[may havehave]2 engaged in conduct that violates section 3 or 4 of this act;

or           (3) (3) other good2[good]2 cause.cause 2, by clear and convincing evidence2.

          c.   2[c.            Nothing in this section precludes a court from ordering such other relief as may be appropriate.1appropriate.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 1or administrative1 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.

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.