Kansas Governor Laura Kelly has signed into law a bill introducing new regulations for the litigation finance industry, marking a significant development in the oversight of third-party legal funding within the state.
The legislation mandates that parties receiving litigation financing must disclose any direct or indirect funding from foreign entities identified as “countries of concern” by the U.S. Secretary of Commerce, including nations such as China, Iran, and Russia. This provision aims to enhance transparency regarding foreign involvement in U.S. legal proceedings.
Additionally, the law requires that details of litigation funding agreements be presented privately to the presiding judge, rather than being disclosed to opposing parties. This approach seeks to balance the need for judicial awareness of external financial interests with the protection of sensitive information from adversarial discovery.
The bill’s passage represents a compromise between the International Legal Finance Association and the Kansas Chamber of Commerce, who had previously been at odds over similar legislative efforts. Both organizations have expressed support for the current measure, highlighting its role in promoting transparency while respecting the confidentiality interests of litigants and funders.
This enactment aligns Kansas with a growing number of states seeking to regulate litigation financing, an industry where investors fund legal cases in exchange for a portion of any financial recovery. The law reflects a broader trend toward increased scrutiny and regulation of third-party funding arrangements in legal proceedings.
