New Jersey would require notice of lawsuit funding and limit funders

A party or attorney who enters a litigation funding agreement would notify the court in writing and send notice to all parties. The agreement must give a third party an interest in money recovered from the case. A party may ask the court to review the agreement privately. Notice is due within 30 days after the case begins, or within 30 days after a later agreement is signed. The act would apply to agreements entered on or after its effective date, 90 days after enactment.

A party could seek discovery of a funder's agreement terms only after meeting one of the bill's stated grounds. This applies to terms of an agreement with a litigation funder, including the funding agreement itself. A party must show that the arrangement is relevant to a claim or defense, provide prima facie evidence of specified funder misconduct, or show other cause by clear and convincing evidence. The act would apply to agreements entered on or after its effective date, 90 days after enactment.

A funder would owe a funded party a fiduciary duty and agree to share responsibility for certain case costs or money sanctions. The duty applies when a funder provides money for a civil or administrative case. The shared responsibility covers costs or money sanctions assessed against the funded party or that party's attorney and arising from or related to the funded case. These rules would apply to funding agreements entered on or after the act's effective date, 90 days after enactment.

A funder could not control case decisions, give legal advice, choose a lawyer, seek to change a party's remedies, receive payments above set limits, or transfer its agreement. These rules cover funders of civil or administrative cases. A funder could receive no more than 25 percent of the money recovered. Without the funded party's express consent, the funder's payment and the attorney's fee together could not exceed 50 percent. These rules would apply to funding agreements entered on or after the act's effective date, 90 days after enactment.

A funding agreement would be unenforceable if the funder violated the bill's duties or conduct limits. This applies to funding agreements covered by the bill. A violation would also count as an unfair or deceptive practice. A court, agency, or tribunal could impose sanctions for noncompliance. These rules would apply to funding agreements entered on or after the act's effective date, 90 days after enactment.