Conservatives split on litigation funding reform legislation

By David Thomas, Mike Scarcella and Sara Merken

Nov 20 (Reuters) - (Billable Hours is Reuters' weekly report on lawyers and money. Please send tips or suggestions to D.Thomas@thomsonreuters.com.)

A push to make outside investors' financial stakes in U.S. litigation more visible is ratcheting up, but GOP-backed legislation in the U.S. House of Representatives is facing fresh opposition from both Democratic lawmakers and some influential conservative groups.

The House Judiciary Committee adjourned a meeting on Thursday without taking a scheduled vote on the measure, sponsored by Republican Darrell Issa of California, which would require all civil litigants in federal court to disclose third-party funding deals and provide copies of their agreements to the court and opposing parties.

Conservative groups including America First Legal, co-founded by senior White House aide Stephen Miller, and the Oversight Project, a spinoff of the Heritage Foundation, came out in recent days strongly opposing the legislation, arguing the transparency requirements would have a chilling effect on free speech.

That placed them in an unlikely alliance with Democratic Rep. Jamie Raskin of Maryland, the ranking member of the Judiciary Committee, who argued against the bill during a committee meeting on Tuesday. Third-party litigation provides a necessary balance against corporate defendants that "will try to spend you into oblivion rather than give you the opportunity to win in court," Raskin said.

A spokesperson for Issa, in an email, said he thinks there "will be a future hearing" on the legislation, dubbed the Litigation Transparency Act. "It's an important issue," he said.

A spokesperson for Raskin had no immediate comment.

A related bill, now headed to the full House, would ban sovereign wealth funds and foreign governments from participating directly or indirectly as third-party litigation funders in U.S. courts. The bill's advancement earlier this week marked the first time a litigation-funding transparency measure cleared a congressional committee, according to the U.S. Chamber of Commerce, which has long advocated for stricter disclosure rules.

Litigation finance is now a multibillion-dollar industry, and similar calls for greater transparency around its use have persisted for years. Advocates say disclosure helps judges and parties avoid conflicts of interest, while funders and their allies argue that existing ethics rules provide an adequate safeguard and warn that new mandates could chill access to justice.

Prior legislative efforts have stalled or faltered, but supporters of the new measures said they see greater consensus for transparency now that could buoy legislation. The U.S. judiciary separately is evaluating whether and how to replace the patchwork of rules on disclosing interested parties in litigation with more standardized regulations.

Issa has been leading the congressional push for funding transparency along with Republican U.S. Senator Chuck Grassley of Iowa, who chairs the U.S. Senate Judiciary Committee. In introducing his latest bill in February, Issa said litigation funding poses unique challenges in patent litigation, where investor-backed entities sometimes seek large settlements against U.S. companies.

Google's general counsel, Halimah DeLaine Prado, in a letter to the Judiciary Committee this week said the tech giant is backing the legislation. Prado told the panel that "our legal system works best when we know who is actually in our courtrooms."

Similar legislation Grassley and Issa introduced in 2018, 2019 and 2021 had a narrower scope, with the transparency requirements applying only to class action and multi-district litigation. Issa's 2025 bill would cover all civil actions.

The International Legal Finance Association, the industry's chief lobbying group, said in a statement that the proposals in Congress would harm small businesses that are overwhelmed in the courts by deep-pocketed adversaries.

-- Just months after facing down a White House executive order that it called an "existential risk," Perkins Coie is set to combine with the UK's Ashurst in a planned merger that will create a 3,000-lawyer mega-firm with $2.7 billion in revenue and 52 offices globally.

Seattle-founded Perkins Coie and London-founded Ashurst expect the deal to close in the third quarter of 2026, subject to approval by a vote of partners at each firm, according to a website describing the proposed merger. The firms said the biggest opportunities for the combined firm, which would be named Ashurst Perkins Coie, are in the technology, energy and infrastructure, and financial services sectors.

The deal comes amid a tumultuous year for Perkins Coie, which was targeted by U.S. President Donald Trump with an executive order in March that threatened its federal contracting work and access to government buildings and officials. The administration is appealing after Perkins Coie and three other firms won rulings that blocked Trump's orders on constitutional grounds.

-- Major U.S. law firms continued to see double-digit gains in 2025, thanks primarily to an increase in billing rates, new survey data showed this week.

Law firm revenues during the first nine months of the year increased 11.7% on average compared to the same period last year, according to data released on Monday by Wells Fargo's Legal Specialty Group. Profits per equity partner rose by 13.9%.

Wells Fargo, which surveyed more than 130 law firms, including 70 that are among the 100 highest-grossing U.S. law firms, attributed this growth to a 9.5% increase in billing rates.

Attorney compensation — the largest component of a law firm's expenses — rose by 10.3%, up from 6.4% compared to last year, Monday's survey said.

-- The state of Alaska said Motley Rice cannot collect additional fees for its work representing the state in opioid litigation, asserting that the plaintiffs law firm violated its contract with the state.

In a November 3 letter to Motley Rice obtained by Reuters, the Alaska attorney general's office said it was "not liable for any penalty nor is it obligated to pay any expenses or attorneys’ fees."

Alaska notified Motley Rice on October 23 that it was terminating their contingency-fee agreement for lawsuits against opioid manufacturers and distributors. The firm denied wrongdoing in a follow-up letter, and argued it was owed fees for its work.

The attorney general's office said it was not going to "claw back" any money Motley Rice already received through the opioid litigation.

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(Reporting by David Thomas and Mike Scarcella)