New Bill Demands Full Disclosure of Foreign Money in Federal Lawsuits and Bans Funding from Foreign Governments

This new legislation, the “Protecting Our Courts from Foreign Manipulation Act of 2025,” aims to yank back the curtain on who is really funding civil lawsuits in federal courts, especially when that money comes from overseas. Essentially, if you’re involved in a federal civil case and the outcome is tied to a payout from a foreign source, you have to tell the court, the other side, and the Attorney General everything about it—and you have to do it under penalty of perjury.

The core of the bill (Section 2) requires any party or their lawyer to disclose the name, address, and country of origin for any foreign person or entity that has a right to receive money contingent on the case’s outcome, whether through settlement or judgment. This isn't just about the current case; it also applies if a foreign funder has a stake in a portfolio of cases handled by the same law firm. You also have to hand over a copy of the funding agreement itself. This disclosure must happen within 30 days of striking the deal or when the lawsuit is filed, whichever is later.

The Ban on Government Cash

Here’s the part that hits the brakes on certain foreign investment: the bill makes it flat-out illegal to use money sourced, directly or indirectly, from a foreign state or a sovereign wealth fund to pay for litigation funding that is contingent on the case’s outcome. If you sign an agreement that violates this ban, the agreement is automatically “null and void.” This means that while a private company based in another country (a “foreign person”) can still fund a lawsuit if they disclose it, money coming from, say, the government of Country X or its state-run investment fund is off-limits for this type of high-stakes legal financing.

What This Means for Your Lawsuit

If you or your company uses third-party litigation funding—a growing market where investors pay legal costs in exchange for a cut of the winnings—this bill creates significant new compliance headaches. For the busy small business owner or a tech startup involved in a patent dispute, if your funding comes from an international investment group, you now have a stack of paperwork and due diligence to complete. You must certify that the funding isn't tied to a foreign government, and if you get that wrong, you face sanctions under Federal Rule 37, which can include fines or even dismissal of your case.

This is a big deal because it takes what was previously a private financial arrangement and makes it public and subject to intense scrutiny by the Department of Justice. For lawyers who manage complex cases, especially those with international clients, they now have the added burden of investigating their clients' funding sources and potentially disclosing details about entire portfolios of cases—information that is usually highly confidential and commercially sensitive.

Tracking the Money Trail

To ensure this isn't just a disclosure requirement that disappears into a filing cabinet, the bill mandates that the Attorney General must submit an annual report to Congress. This report will detail everything they learn about foreign litigation funding: the names of the funders, the countries they come from, the total estimated amount of foreign money spent on litigation, and a summary of the types of cases being funded. This creates a permanent mechanism for Congress and national security officials to monitor foreign financial involvement in the U.S. judicial system.