District of New Jersey Clarifies New Local Civil Rule Regarding Third-Party Funding Disclosures

Faegre Drinker Biddle & Reath LLP

Faegre Drinker Biddle & Reath LLP

Over the last four months, we have tracked the District of New Jersey’s proposal and adoption of a new Local Civil Rule – L. Civ. R. 7.1.1 –  requiring lawyers to disclose details about third-party litigation funding.  The Clerk of the District of New Jersey has now issued a Notice to the Bar clarifying that this new Rule only requires the filing of a statement where third-party litigation funding exists.

As we have previously explored, the new Rule adopted on June 21, 2021 requires parties to file statements setting forth information about any non-party that is “providing funding for some or all of the attorneys’ fees and expenses for the litigation on a non-recourse basis” in exchange for either “a contingent financial interest based upon” the litigation’s results or a “non-monetary result that is not in the nature of a personal or bank loan, or insurance.”  In new cases, such statements must be filed within 30 days of the filing of an initial pleading or removal.  For all cases that were pending in the District of New Jersey prior to adoption of Rule 7.1.1, these disclosure statements must be filed “within 45 days of the effective date of th[e] Rule” – i.e., by Thursday, August 5, 2021.

The July 29, 2021 Notice to the Bar clarifies that Local Civil Rule 7.1.1 “requires the filing of a statement only where third-party litigation funding exists,” and “does not require the filing a negative statement to the effect that no third-party litigation funding exists in the case.”

The new Rule imposes a requirement on parties receiving third-party litigation funding.  Those parties not receiving such funding need not file Rule 7.1.1 statements.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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