Federal legislation introduced by Rep. Ben Cline (R-Va.) is drawing criticism from international investors who finance U.S. lawsuits. The bill would prohibit sovereign wealth funds from investing in U.S. litigation, a move that could affect the operations of major funders such as Fortress Investment Group, Burford Capital, Omni Bridgeway, Ares Management Corp., Ellington Management Group, and BlackRock Inc.
The proposed law would also require foreign investors to disclose their involvement in U.S. lawsuits. Litigation funders argue this could slow down court proceedings as defendants might seek additional information during discovery.
Industry opponents like the U.S. Chamber of Commerce have supported the legislation, arguing that foreign-backed litigation funding leads to frivolous lawsuits and increases business costs. After the House Judiciary Committee voted 15-11 in November to recommend the bill, a pro-industry lobbying group was formed to counter these efforts.
Investing in lawsuits has become increasingly popular among financiers seeking returns independent of traditional markets. The litigation funding market is projected to grow from nearly $21 billion last year to about $50 billion by the mid-2030s, according to Katch Investment Group.
Some foreign fund managers are reconsidering their strategies due to the legislative uncertainty. Ignacio Delgado, general counsel for Loopa Finance—which operates mainly in Latin America and Europe—said: “This lack of certainty and safety it is not helping anybody to feel happy about investing in the USA.”
Susan Dunn, founder of UK-based Harbour Litigation Funding and chair of the Association of Litigation Funders of England and Wales, questioned why further regulation is needed given existing restrictions by the U.S. Treasury Department’s Office of Foreign Assets Control on countries like Iran and Russia: “so why do you need more law?” She added: “There’s so much anti-foreign that’s going on in the US at the moment,” and commented on lawmakers’ tactics: “it’s like if I use the ‘foreign’ word then that’ll get me” bill passage.
Cline’s current proposal follows earlier attempts at regulating foreign investment in litigation finance and has advanced further than two other similar federal bills. The House Judiciary Committee’s approval marked significant progress for Cline’s legislative agenda.
“I’m hopeful that the House will take it up soon,” Cline said in an interview. “There’s an appetite for acting sooner rather than later, and I think that it’s a bipartisan piece of legislation that should be able to pass with significant levels of support in both the House and the Senate.”
Cline argues that allowing foreign funders access to U.S. litigation poses national security risks—a concern echoed by a 2022 report from the U.S. Chamber of Commerce Institute for Legal Reform: “Judges, the parties, and the Justice Department should know if foreign-sourced money is being poured into US,” stated a Chamber spokesperson when Sen. John Kennedy (R-La.) introduced a Senate version of Cline’s bill.
Sovereign wealth funds play a significant role as investors in litigation finance firms; for example, Abu Dhabi’s Mubadala Investment Co., through its subsidiary, acquired a majority stake in Fortress Investment Group in 2024; Burford Capital also has ties with an undisclosed sovereign wealth fund; Ares lists sovereign wealth funds among its investor base after acquiring 70% interest in an Omni Bridgeway fund; Ellington Management Group and BlackRock have also reported investments from unnamed sovereign wealth funds.
If enacted, Cline’s bill would force affected firms either to end relationships with sovereign wealth funds or stop investing in future U.S.-based cases—both options presenting operational challenges.
Some companies declined comment or did not respond regarding potential impacts from the legislation; however, an Omni Bridgeway representative said they do not believe they will be affected but need more details before making a final assessment.
Executives at international firms expressed frustration over being grouped together regardless of whether their investments come from domestic or foreign sources. Susan Dunn noted: “Everybody ends up being grouped together.” Nick Rowles-Davies, CEO of UAE-based Lexolent, said disclosure requirements could deter some financiers: “We don’t fear regulation or disclosure,” he said. “The challenge will be what effect does it have on the investors?”
Currently there is no federal requirement for litigation funders to disclose their identities; past legislative attempts have failed except for one Delaware federal court rule which led to fewer third-party-funded cases.
As calls for regulation increase among lawmakers including Cline—who has represented Virginia’s 6th district since 2019 after serving many years as a state delegate—litigation funders are becoming more organized with new trade groups joining lobbying efforts.
Dunn reflected on ongoing debates over industry regulation: “I would’ve thought by now it would’ve just kind of calmed down and just been another part of the legal landscape,” she said regarding litigation finance debates within Congress. “It does seem to have been quite sort of weaponized politically.”
Ben Cline currently serves as congressman for Virginia’s 6th district after replacing Bob Goodlatte in 2019; he previously served as a delegate at Virginia’s state house between 2002–2018.
He was born in Stillwater, Oklahoma in 1972 and resides today in Fincastle.
Cline holds degrees from Bates College (BA) and University of Richmond (JD).
