Litigation funding in the United States in 2026.

As of October 2026, no federal statute or nationwide procedural rule requires a party to disclose litigation funding in a US civil case Source [1]. Each state applies its own law. Wisconsin has required funding agreements to be shared with the other parties since 2018 Source [2], and North Carolina has prohibited such funding since 22 June 2026 Source [3]. In Washington, lawmakers proposed a tax on funders’ gains in 2025, which was dropped from the budget bill before the Senate passed it Source [4] Source [5] Source [6].

The US market and federal law.

The Government Accountability Office (GAO) reviews public programmes on behalf of Congress. It published a report on third‑party litigation funding on 20 December 2022 Source [7]. According to the literature it reviewed, the practice gained a foothold in the United States around 2010. The report separates commercial funding, provided to companies or law firms, usually for several million dollars, from consumer funding. The latter typically advances individuals less than $10,000, which they use for living expenses.

In the GAO’s words, “The third‑party litigation financing industry is not specifically regulated under U.S. federal law” Source [7]. Each state’s rules therefore apply. Burford Capital notes in its annual report that several jurisdictions prohibit or restrict funding someone else’s lawsuit Source [8]. Many common law systems call this maintenance, with champerty as one of its forms. The strength of these prohibitions varies from place to place.

State laws.

Since 2018, several state legislatures have adopted rules specific to litigation funding. Some open the funding agreement to discovery, the pre‑trial stage in which the parties exchange documents. We cite the Wisconsin statute from the work of the federal courts Source [2], and the others from the texts each state publishes.

Several of these laws target foreign money. Indiana bans funds from entities linked to countries classed as of concern Source [10]. Since 6 October 2026, Ohio has prohibited any agreement with a person not domiciled in the United States Source [14].

North Carolina goes further. Its statute provides that “It is unlawful for a person to engage in litigation investment in this State” Source [3]. It covers any money provided for the costs of proceedings in return for a right that depends on their outcome. A contract that breaches it is void, and in an action brought by the state attorney general, the court may impose a civil penalty of up to $50,000 per violation. The ban covers proceedings commenced, and contracts entered into, renewed or amended, on or after 22 June 2026. The lawyer’s contingency fee, an insurer’s obligation to indemnify or defend a party and loans repayable whatever the result of the dispute remain outside its scope.

The 2025 federal tax proposal.

On 20 May 2025, Republican Senator Thom Tillis introduced the Tackling Predatory Litigation Funding Act (S. 1821), which was referred to the Senate Committee on Finance Source [4]. On the same day, Representatives Kevin Hern and Randy Feenstra put an identical bill before the House (H.R. 3512) Source [15].

The bill creates a tax on “qualified litigation proceeds”, the gain a funder derives from a litigation financing agreement. Its rate equals the highest federal income tax rate for individuals plus 3.8 percentage points Source [4]. The party or law firm holding the case proceeds withholds tax at half that rate from each payment due to the funder. The tax applies to any funder “without regard to whether such party is created or organized in the United States” Source [4].

On 28 June 2025, an amendment tabled in the Senate, SA 2360, proposed a substitute text for the H.R. 1 budget bill Source [5]. Its section 70604 included the tax, at a rate of 31.8%. The Senate passed H.R. 1 on 1 July 2025, by 51 votes to 50, in a version that no longer contained it Source [6]. The law signed on 4 July 2025 (Public Law 119-21) contains no trace of it.

As of 21 October 2026, S. 1821 and H.R. 3512 are still in committee. Eight senators have joined Thom Tillis’s bill, the latest on 13 July 2026 Source [15].

Disclosure in the federal courts.

The Federal Rules of Civil Procedure do not require funding to be disclosed. The Advisory Committee on Civil Rules, which prepares them, received a proposal to that effect in 2014, aimed at Rule 26(a)(1)(A) Source [1]. It has followed the issue since and set up a subcommittee on third‑party litigation funding in October 2024. Its members are considering a disclosure requirement in Rule 26(a)(1), or a mention of funding in Rules 16 and 16.1, which govern case management. The topic is listed among the information items for the committee’s meeting of 21 October 2026.

Some federal courts already require transparency. Since 21 June 2021, Local Civil Rule 7.1.1 of the District of New Jersey has required the parties to disclose any non‑recourse funding of their case Source [16]. It covers any third party “providing funding for some or all of the attorneys’ fees and expenses”. The statement gives the funder’s identity, says whether its approval is needed for litigation or settlement decisions, and describes its financial interest. In the District of Delaware, Chief Judge Connolly has required the same information since 18 April 2022 Source [17]. The funded party lodges it in each case assigned to him.

In September 2026, the Federal Judicial Center, the research agency of the federal courts, reviewed the New Jersey rule Source [1]. It identified funding disclosures in 104 civil cases over five years, about one disclosure per 1,000 civil cases, mostly in civil rights and patent cases. Most of these statements said that the funder did not have to approve a settlement or litigation decisions.

In Congress, at least five bills deal with this funding, according to the Advisory Committee Source [1]. The most advanced, H.R. 2675 (Protecting Our Courts from Foreign Manipulation Act), would bar foreign states and sovereign wealth funds from funding cases they are not party to. It would also require each litigant to disclose any funder from abroad to the court, the other parties and the Department of Justice. The House Judiciary Committee approved it in November 2025, by 15 votes to 11, and published its report on 15 June 2026 Source [18]. As of 21 October 2026, neither chamber has passed any of these bills.

Burford Capital, a funder listed in New York and London.

Burford Capital Limited, a Guernsey company, is listed on the New York Stock Exchange and on the AIM market of the London Stock Exchange Source [8]. Since 1 January 2025, it has reported under the rules that apply to US public companies. Its annual report on Form 10-K, submitted to the Securities and Exchange Commission on 26 February 2026, describes its business.

Burford writes there: “We rarely engage in transactions in which we are providing less than $5.0 million in capital” Source [8]. It describes itself as a generally passive investor, without control of the litigation, that loses its stake if the claim produces nothing.

Mid‑market disputes, with €100,000 to €1 million at stake, sit well below that threshold. The accounts of listed funders therefore cover cases of a different size, and the global market projections rest on third‑party studies.

What these rules change for a French case.

These rules apply to cases brought in the United States. In France, the funding of an individual case rests on freedom of contract and on the lawyer’s professional rules. The Versailles Court of Appeal accepted this type of agreement on 1 June 2006. The Act of 30 April 2025 refers to third‑party funding only for group actions, as the French framework explains.

Indiana, Louisiana, Georgia and Ohio bar the funder from directing the case or a settlement Source [10] Source [11] Source [13] Source [14]. In France, the Paris Bar Council specified on 21 February 2017 that the lawyer takes instructions only from the client. In the United States, most of the state statutes cited exclude the contingency fee, which US counsel charge according to the outcome. French law, by contrast, prohibits the pactum de quota litis, under which pay would depend solely on the result, and allows only an additional fee.

Burford also notes that in many jurisdictions, though generally not in the United States, the losing party pays the winner’s legal expenses Source [8]. In France, under the loser pays rule, the court in principle orders the unsuccessful party to pay the court costs. It may also order that party to pay its opponent a sum under article 700 of the Code of Civil Procedure.

Hello Justice is the first French company dedicated to mid‑market litigation funding, from €100,000 at stake. It has more than 600 live cases, taken on since 2024. New legislation, in France or in the European Union, could change the terms of funding, as the risks page explains. Our 2026 overview describes the rules in force in Europe.

Frequently asked questions.

Is litigation funding legal in the United States?

Federal law does not specifically regulate it, according to the GAO Source [7]. Each state sets its own rules, and several oversee the business through transparency of agreements or registration of funders. North Carolina has prohibited it for proceedings in the state since 22 June 2026 Source [3].

Do you have to disclose litigation funding to a US court?

No national rule requires it as of October 2026 Source [1]. The District of New Jersey has required it since 2021, and a Delaware judge since 2022 Source [16] Source [17]. Kansas has the agreement handed to the court, and Louisiana opens its existence to discovery Source [12] Source [11].

Did Congress tax litigation funders’ gains?

No. The text tabled in the Senate on 28 June 2025 provided for a 31.8% tax Source [5]. It appears neither in the version passed on 1 July 2025 nor in the law of 4 July 2025 Source [6]. As of 21 October 2026, the S. 1821 bill is still in committee Source [15].