When One Case in the Portfolio Changes the Disclosure Calculus
Litigation Funding: How Disclosure Rules Apply in a Portfolio World
April 6, 2026
Portfolio funding now represents a substantial share of the litigation finance market. Rather than underwriting a single case, funders increasingly deploy capital across a group of matters, spreading risk and tying returns to portfolio-level performance. The model is familiar to funders and repeat litigants. In most respects, it remains invisible to courts.
That disconnect matters.
Courts and legislatures increasingly require disclosure of third-party litigation funding in certain contexts. But those requirements are framed at the level of the individual case. They ask who is funding the litigation, what interest the funder has in the case, and whether the funder exercises control over the action. They do not ask how the economics of that case may be tied to others in a broader portfolio. In practice, that question is rarely considered.
The result is a tension that is easy to overlook and harder to resolve: how to describe a funder’s interest in the case before the court when the economics extend beyond it.
The Existing Disclosure Framework Is Case-Specific
The majority rule remains that litigation funding arrangements are not automatically discoverable, and communications with funders are often protected as work product.¹ But a growing number of courts and jurisdictions have moved beyond ad hoc discovery disputes to require affirmative disclosure.
The District of New Jersey is the clearest example. Its local rule requires parties to disclose any third-party funder providing non-recourse financing in exchange for a contingent interest in the proceeds of the litigation, along with the nature of that interest and whether the funder has approval rights.² The rule is triggered by the case before the court. It does not address whether the disclosed interest is part of a broader portfolio arrangement.
Judge Colm Connolly in the District of Delaware has imposed a similar requirement through standing orders in cases assigned to him, directing parties to identify third-party litigation funders and disclose related ownership interests.³ The Northern District of California requires disclosure of entities with a financial interest in the litigation in certain class actions.⁴
At the state level, Wisconsin, West Virginia, and Illinois have enacted statutes requiring disclosure of litigation funding arrangements in civil actions, while other states have adopted variations on that approach.⁵ These regimes differ in scope and detail, but they share a common feature: they are focused on the case at hand.
Portfolio Funding Complicates the Inquiry
Portfolio funding does not fit neatly within that framework.
In a portfolio structure, a funder’s return may depend on the performance of multiple cases, with cross-collateralization or other mechanisms linking outcomes across the portfolio. The funder’s “interest” in any one case may therefore be only partially captured by reference to that case alone.
Yet disclosure rules generally require just that. Parties are asked to describe the funder’s interest in the litigation before the court, even where that interest is economically tied to other matters.
In practice, this mismatch is rarely addressed. Disclosure is typically made at a high level: identifying the funder, describing a contingent financial interest, and noting any approval rights. That disclosure may be accurate as far as it goes, but it does not convey whether the economics of the case are linked to a broader portfolio or how those linkages might operate.
Sophisticated funders understand these structures. Courts generally do not engage with them. And parties do not appear to be pressed to explain them.
The Issue Is Largely Ignored in Practice
Experience bears this out. Even among sophisticated participants in the litigation finance market, the implications of portfolio structures for disclosure are not commonly discussed. Funders are focused on collateral and returns. Litigants are focused on compliance with the applicable rule. Courts are focused on the case before them.
The result is a quiet but persistent gap between how funding is structured and how it is described.
That gap may not matter in many cases. But it has potential implications for issues that courts do care about, including control, conflicts, and privilege. If a funder’s economic incentives are shaped by a portfolio rather than a single case, that may affect how its role is understood, even if the disclosure does not capture those dynamics.
Recent commentary suggesting that courts are reassessing privilege assumptions in the funding context underscores the point.⁶ Even that discussion, however, largely assumes a single-case funding model. Portfolio structures complicate the analysis in ways that are not yet being addressed.
Where This Leaves Parties and Funders
For now, the practical answer remains straightforward. Parties should comply with applicable disclosure requirements as written, which generally means describing the funder’s interest in the case before the court. There is typically no requirement to disclose the existence or composition of a broader portfolio.
But the underlying tension remains. As disclosure regimes expand and scrutiny of litigation funding increases, the gap between case-specific disclosure and portfolio-level economics may become harder to ignore.
For an industry that has grown rapidly in scale and sophistication, that question has received remarkably little attention. It is unlikely to remain that way.
Footnotes
1. See, e.g., Miller UK Ltd. v. Caterpillar, Inc., No. 10 C 3770, 2014 WL 67340 (N.D. Ill. Jan. 6, 2014) (addressing privilege issues in the context of third-party litigation funding).
2. D.N.J. L. Civ. R. 7.1.1 (Disclosure of Third-Party Litigation Funding).
3. Standing Order Regarding Third-Party Litigation Funding Arrangements, In re Patent Cases (D. Del. Apr. 18, 2022) (Connolly, C.J.).
4. N.D. Cal. Procedural Guidance for Class Action Settlements (requiring disclosure of persons or entities with a financial interest in the litigation in class action filings).
5. See, e.g., Wis. Stat. § 804.01(2)(bg); W. Va. Code § 46A-6N-6; 735 Ill. Comp. Stat. 5/2-402 (as amended) (addressing disclosure or regulation of litigation funding arrangements); see also Westfleet Advisors, Litigation Finance Market Report (2024) (noting growth and evolving regulatory attention in the U.S. market).
6. See David H. Levitt & Andrew J. Sherman, Disclosure Tide Is Turning for Third-Party Litigation Funding, Bloomberg Law (2026) (arguing that courts are increasingly scrutinizing privilege claims involving litigation funders).
