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New Law: All Third-Party Litigation Funding Must Be Disclosed in Wisconsin

Constraints on litigation funding just got real in Wisconsin, and will make the legal business a little trickier everywhere else.

Wisconsin now requires attorneys to disclose any third-party litigation funding deals to clients and "to the other parties" in a case. "Oh no you didn't." (That's what we said.)

But the law does exclude contingency fee agreements, a big "whew" to plaintiffs' counsel who depend on litigation finance to swing at the big ones. Now what are you going to do about it?

Full Disclosure

The U.S. Chamber of Commerce supports the new legislation, which means it will probably gain traction in other states. If it cuts back on more lawsuits and prolonged litigation, the chamber's Legal Reform Institute says, that's a good thing.

That's also a cold bucket of water in your face if you need financial help in litigation. In case it actually matters to you, Section 12. 804.01 (2) (bg) of the 2017 Wisconsin Act 235 says:

"Third party agreements. Except as otherwise stipulated or ordered by the court, a party shall, without awaiting a discovery request, provide to the other parties any agreement under which any person, other than an attorney permitted to charge a contingent fee representing a party, has a right to receive compensation that is contingent on and sourced from any proceeds of the civil action, by settlement, judgment, or otherwise."

So like we said, yeah.

Tell Your Clients

Maybe it won't be so bad -- telling the enemy that you have the resources to fight. It adds substance to saber-rattling when you actually have weapons.

Telling your clients is another thing. Jonathan Tung, writing about it years ago, said it's better to tell them early.

"Like anything else, it's usually better to set out the parameters at the very beginning rather than to wait for awkwardness later on," he wrote for FindLaw.

Ethics often precede the law anyway, except perhaps in Wisconsin.

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