Arizona Chamber, business community cheer as state Supreme Court issues new rules for lawsuit lenders

The Arizona Chamber of Commerce & Industry is cheering the adoption by the state Supreme Court of an amendment to the rules of civil procedure that will dramatically increase the transparency over who is funding litigation. 

Third-party litigation funding (TPLF), also referred to as lawsuit lending, is when an entity or individual finances a lawsuit in return for a portion of the settlement or awarded damages. 

Some lawsuit loans are geared toward plaintiffs in a personal injury or tort case who use the loan to finance their living expenses while waiting for a lawsuit to be settled. But another type of loan can bankroll large-scale commercial or mass-tort cases. These types of cases might attract large financial backing from institutional investors, even sometimes by entities with ties to foreign governments. 

Before today’s action by the Arizona Supreme Court, judges and defendants had very little knowledge of who was financing a lawsuit, even if the financier was from out of the country. 

“These loans have a distorting effect on lawsuits. They drive up costs and they extend the length of litigation, as plaintiffs attempt not only to settle their case but also to pay off their loan,” Arizona Chamber of Commerce & Industry President and CEO Danny Seiden said. “For too long, Arizona courtrooms were wide open to unscrupulous lenders trying to score a quick buck or to foreign funders scheming to gain an advantage against a competitor. Thanks to today’s action by the Arizona Supreme Court, there will finally be greater disclosure to all parties that a lawsuit is being funded by an outside entity.” 

The Chamber has made increasing transparency over TPLF a central part of its civil justice reform agenda. 

In addition to leading business community support for adoption of the court rule change, the Chamber this year successfully advocated for passage of S.B. 1215, legislation introduced by state Sen. Vince Leach (R-SaddleBrooke) and signed into law by Gov. Katie Hobbs that, among other things:

• Prohibited lending by foreign adversaries: The bill prohibits litigation funding directly or indirectly financed by a “foreign entity of concern,” including entities affiliated with governments identified by federal authorities as national security threats or placed on terrorism or sanctions lists. 
• Imposed limits on control: Litigation financiers are barred from directing or influencing decisions in a case, including legal strategy, attorney selection, or settlements. Control remains solely with the named party and counsel of record. 
• Requires disclosure of referral fees: Any commission, referral fee, or consideration paid to attorneys or health care providers for referring a client must be disclosed in writing and separately acknowledged by the borrower before the agreement is executed. 

S.B. 1215, coupled with the required disclosure of third-party litigation funding called for by the new Supreme Court rule, greatly enhances the integrity of Arizona’s legal system. 

Today’s action is the first time any state court in the country has sought to increase transparency over TPLF.

“The Chamber thanks the Court for adopting this important rule change,” Seiden said. “They have made Arizona a national leader in ensuring our justice system is better protected against predatory actors.” 

Beginning Jan. 1, 2026, the new disclosure rule will apply in all civil cases where litigation funding agreements are involved.