Overview
Title
To amend title 28, United States Code, to provide for transparency and oversight of third-party beneficiaries in civil actions.
ELI5 AI
H. R. 1109 wants people in court to share if someone else is going to get money from their case, but there are some tricky parts about what exactly needs to be shared and how.
Summary AI
H. R. 1109 proposes changes to title 28 of the United States Code to enhance transparency and oversight regarding third-party beneficiaries in civil lawsuits. The bill mandates that parties involved in a lawsuit must disclose any agreements where someone, other than their lawyer, stands to benefit based on the lawsuit’s outcome. This includes sharing any supporting documents, except in specific instances like standard loan repayments with interest. The bill's new rules would apply to ongoing and future civil cases from the date it becomes law.
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AnalysisAI
General Summary
The bill, titled the "Litigation Transparency Act of 2025," aims to introduce more transparency into civil litigation by amending title 28 of the United States Code. Specifically, it requires parties in a civil lawsuit to disclose any third-party who stands to benefit financially from the outcome of the case, excluding attorneys. There are certain exceptions, particularly for loan repayments and attorney's fees. This bill intends to bring to light any undisclosed interests that might influence the litigation process.
Significant Issues
One of the major concerns with this bill is its lack of specificity in certain definitions. For example, the bill does not clearly define what constitutes a "third-party beneficiary," which may lead to varied interpretations and legal ambiguities. This could result in inconsistent application across different cases.
Additionally, the bill does not specify enforcement mechanisms or penalties for failing to make the required disclosures. Without a framework to ensure compliance, the effectiveness of the bill's transparency objectives may be compromised. The language regarding the need to correct disclosures in a "timely manner" is also vague, potentially leading to disputes over what constitutes appropriate timing.
The bill's exceptions, such as those related to loan repayments, are not thoroughly defined. This could allow parties to circumvent the disclosure requirements by reclassifying contingent payments as loans. Moreover, the bill does not clarify which types of civil actions are affected, potentially leading to uncertainty about its applicability.
Impact on the Public
For the general public, the bill could enhance trust in the civil justice system by ensuring that all parties involved in a lawsuit are on a level playing field. Transparency about who stands to benefit financially from a case could reduce any perceived conflicts of interest.
However, the lack of clarity and precise definitions could lead to increased legal disputes and litigation costs. If parties struggle to understand their obligations under the bill, this could result in more legal challenges, potentially delaying the resolution of civil cases.
Impact on Specific Stakeholders
Legal Professionals: Lawyers will need to navigate the bill's requirements carefully to ensure compliance. The lack of clear guidelines might result in increased administrative burdens as they work to determine what needs to be disclosed and how disclosures should be updated.
Litigants: Individuals or businesses involved in lawsuits might benefit from the increased transparency this bill aims to provide. However, they may also face increased costs and complexity if the bill leads to additional legal challenges or disputes over compliance.
Financial Institutions and Investors: Entities that provide litigation funding might be impacted by the bill's requirements, particularly if they are classified as third-party beneficiaries. Depending on how such institutions are recognized under the bill, they could be required to disclose their financial arrangements, impacting their strategic interests.
Overall, while the "Litigation Transparency Act of 2025" seeks to introduce important transparency into civil litigation, its effectiveness will largely depend on how ambiguities and enforcement issues are addressed moving forward.
Issues
The bill's definition of third-party beneficiary disclosures lacks specificity and could lead to legal ambiguities. For instance, the language 'any person (other than counsel of record) that has a right to receive any payment or thing of value' in Section 1660 could be interpreted in multiple ways depending on the context of agreements. This ambiguity may result in inconsistent application and confusion. [Section 1660]
The bill does not address enforcement mechanisms or penalties for failing to disclose third-party beneficiary information. Without clear enforcement provisions, compliance may be undermined, rendering the transparency objective ineffective. [Section 2]
There is no definition in the bill for what constitutes a 'timely manner' regarding the duty to correct disclosures. This could lead to differing interpretations and inconsistent enforcement, making it difficult to ensure compliance. [Section 1660]
The exception for loan repayments lacks clarity on what constitutes a 'loan,' which could lead to disputes over whether certain financial arrangements fall under the exception. This vagueness might allow some parties to evade disclosure requirements by characterizing contingent payments as loans with permissible interest rates. [Section 1660]
The bill does not specify which types of civil actions are affected. This lack of specification could lead to potential ambiguity in its application, affecting how the transparency measures are implemented across different cases. [Section 3]
The requirement for disclosure and correction lacks specificity regarding the form or methods of communication. This could result in inconsistencies in how such communications are made across different cases, potentially complicating transparency efforts. [Section 1660]
The text includes a provision that amendments will apply to any civil action pending on or commenced after the date of enactment, which might create confusion for cases near the enactment date as to whether they are subject to the new requirements. [Section 3]
Sections
Sections are presented as they are annotated in the original legislative text. Any missing headers, numbers, or non-consecutive order is due to the original text.
1. Short title Read Opens in new tab
Summary AI
The first section of the bill introduces the act's official short title, which is the “Litigation Transparency Act of 2025.”
2. Transparency and oversight of third-party beneficiaries in civil cases Read Opens in new tab
Summary AI
The section of the bill requires parties in civil cases to disclose to the court and other parties the identity of any third-party beneficiaries who might receive payment based on the outcome of the case. Exceptions to this requirement include straightforward loan repayments, interest payments under certain limits, and attorney’s fee reimbursements.
1660. Third-party beneficiary disclosure Read Opens in new tab
Summary AI
In this section, parties involved in a civil case must reveal the identity of any person who stands to gain money or benefits based on the case's outcome and provide related agreements, except where repayments pertain strictly to loans or attorney's fees. Additionally, if any disclosed information changes, parties must update the information promptly, and all disclosures should be made within a specific time frame after the agreement is made or the case is filed.
3. Applicability Read Opens in new tab
Summary AI
The changes introduced by this Act will affect any ongoing or new civil lawsuits starting from the day the Act becomes law.