Threats Posed by Third-Party Litigation Funding

[Gunnar Larson]

December 22, 2022
The Honorable Merrick B. Garland
Attorney General
U.S. Department of Justice
950 Pennsylvania Avenue NW
Washington, DC 20530
The Honorable Lisa O. Monaco
Deputy Attorney General
U.S. Department of Justice
950 Pennsylvania Avenue NW
Washington, DC 20530
Mr. Mathew G. Olsen
Assistant Attorney General
National Security Division
U.S. Department of Justice
950 Pennsylvania Avenue NW
Washington, DC 20530
Re: Threats Posed by Third-Party Litigation Funding
Dear Attorney General Garland,
The undersigned State Attorneys General write to ask the United States
Department of Justice
what steps are being taken to protect the country against potential threats
posed by third-party
litigation funding (“TPLF”) in civil matters by foreign entities hostile to
the United States. As
you know, TPLF refers to the practice of an outside third party providing
resources to fund civil
disputes with the understanding that if the claim is successful, the third
party will receive a share
of the recovery. This practice has become quite lucrative, as the market
has swelled to an
estimated value of between $2.3 and $5 billion invested in lawsuits in the
United States.1, 2
 It is
impossible to know the extent that foreign adversaries are spending on
American litigation
through TPLF, which leads to significant concern that TPLF is being used to
harm our States and
threaten our country’s economic and national security.

1
https://www.natlawreview.com/article/considerations-aba-s-best-practices-litigation-funding
2 https://www.law360.com/articles/992299

Foreign adversaries leveraging our judicial system in order to undermine
our nation’s interests is
a grave concern to our States. Through strategic lending, foreign
adversaries could threaten our
economic and national security by weaponizing the U.S. judicial system.3
 For instance, foreign
countries such as China and Russia could use TPLF to fuel targeted lawsuits
designed to weaken
U.S. national defense companies in the business of protecting our national
security interests.
Likewise, costly litigation aimed at sabotaging major energy sectors that
are vital to our
economy poses a direct threat to our economic security interests and global
independence.
Despite several reports and public discussion on TPLF, the federal
government has not
implemented a strategy to protect our nation’s court system from foreign
interference by
adversaries set on damaging American institutions. Concerns have been
raised about cases being
funded to target specific individuals or businesses, or simply to further
backlog our courts at the
expense of the American taxpayers.4
 Nevertheless, the federal government has remained silent.
Ensuring that our justice system remains protected from foreign
interference is of paramount
importance. We are requesting information about what the Justice Department
has done or is
currently doing to address these concerns. The security concerns posed by
foreign TPLF cannot
be ignored any further without risking serious consequences to our nation.
State Attorneys
General stand ready to be part of the solution and we ask that our federal
partners take action to
help ensure that TPLF by foreign adversaries plays no role in American
justice, our economy, or
our national security.
Sincerely,
Christopher M. Carr
Georgia Attorney General
Jason Miyares
Virginia Attorney General
Steve Marshall
Alabama Attorney General
Leslie Rutledge
Arkansas Attorney General
3
https://instituteforlegalreform.com/research/ilr-briefly-a-new-threat-the-national-security-risk-of-third-party-
litigation-funding/
4
https://thehill.com/opinion/national-security/3758137-foreign-state-sponsors-of-litigation-should-lose-
sovereign-immunity-from-being-sued/

Todd Rokita
Indiana Attorney General
Derek Schmidt
Kansas Attorney General
Daniel Cameron
Kentucky Attorney General
Austin Knudsen
Montana Attorney General
Douglas J. Peterson
Nebraska Attorney General
Dave Yost
Ohio Attorney General
Alan Wilson
South Carolina Attorney General
Jonathan Skrmetti
Tennessee Attorney General
Sean D. Reyes
Utah Attorney General
Patrick Morrisey
West Virginia Attorney General
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