Chamber of Commerce Looking Out for Big Businesses in Bid to Change Federal Court Rules

The U.S. Chamber of Commerce is once again trying to convince the federal court system to require disclosure of litigation finance at the cost of small business owners.

The Chamber recently petitioned the Committee on Rules of Practice and Procedure of Administrative Office of the U.S. Courts to require the disclosure of litigation finance. The litigation finance industry supports parties who are not able to pay for expensive legal representation.

Those in the industry do extensive investigation into the cases and many small business owners cannot afford access to the justice system to protect their interests and utilize litigation finance to help.

“The fact of the matter is, the larger the potential damages and more complicated the case, the harder it is to win. Commercial litigation finance allows all plaintiffs with strong, meritorious claims access to the tools necessary to hold wrongdoers accountable for their actions in court,” Bentham IMF’s Chief Investment Officer Allison Chock told The National Trial Lawyers. “What we’re seeing in the Chamber’s latest petition is prioritization of big-business interests and an attempt to protect the Chamber’s largest and most profitable members from legal accountability under the guise of protecting the public from ‘third parties interested solely in profit.’”

Although the Chamber of Commerce says its mission is to promote free market and innovation, the lobbying group’s efforts have been particularly one-sided since 2014. In 2014, the Chamber of Commerce began its push to require litigation finance disclosure, while not requiring the same disclosures from big businesses who can afford top notch legal representation in commercial litigation.

According to the petition, the legal finance industry is out of control, but commenters point out that legal financing helps small businesses protect and defend themselves against big businesses in expensive commercial litigation.

The Chamber of Commerce wants these small businesses to be required to disclose the existence of financing, as well as the financing details, in every state, ignoring state laws. For all practical purposes, this rule would force plaintiffs, usually small businesses, to show their hand in commercial litigation. Small businesses would be required to disclose their litigation budget, forcing unfair settlements. Big businesses who can afford to retain attorneys without financing would not be required to disclose anything.

The petition also runs contrary to attorney-client privilege and runs afoul of rules that disallow references to liability insurance in front of a jury. Both rules protect parties from being exposed to unfair advantages.

The Chamber of Commerce argues that litigation finance disclosure is necessary to enforce an antiquated legal doctrine called “champerty.” Champerty regulations are from England and prohibit those with no interest in a lawsuit from funding the lawsuit to share in any verdicts or awards; however, the Chamber of Commerce does not propose limiting litigation finance disclosure to jurisdictions with champerty or related regulations.

“Upon looking more closely at the Chamber’s petition, it becomes clear that a proposed rule change requiring mandatory disclosure of litigation finance should, once again, be rejected by the Committee,” concluded Bentham IMF’s Chief Investment Officer.