Tuesday's actions involving legal financing and subpoenas occurred in Charlotte, North Carolina, during a semiannual meeting of the Advisory Committee on Civil Rules. The panel, which crafts legal policy for the Judicial Conference of the United States, also declined Tuesday to pursue a few initiatives; most notably, a proposed overhaul of the main procedural rule governing class actions.
Here's a rundown of highlights from the five-hour meeting, which followed a six-month public comment period on various proposals.
Third-Party Litigation Funding
Amid prodding from major companies, the civil rules panel in 2024 formed a subcommittee to develop a disclosure rule for third-party litigation financing — the term for institutional investors bankrolling lawsuits in exchange for portions of settlements or judgments. Subcommittee members have been conducting research and attending related events; one such event, an all-day symposium called "Charting the Future of Litigation Finance," is set for Friday at the New York University School of Law.
Tuesday's agenda discussed a similar conference at George Washington University, saying the October gathering "made clear there are many issues to be considered, and also some vehemence about which of those issues to emphasize."
U.S. District Judge R. David Proctor, the subcommittee's leader, painted a detailed portrait of those issues Tuesday. They include the types of funding arrangements that might be subject to disclosure, the scope of any disclosures and the near-constant evolution of the legal finance industry.
"We're concerned about people outside the courtroom arguably controlling what's going on in the courtroom," Judge Proctor said, adding that it's "fair to say the subcommittee is convinced that we ought to be moving forward" with drafting a rule.
Without a formal vote, the full committee assented Tuesday to further development of a disclosure mandate. But whether a rule ultimately wins approval is far from certain. Similar efforts in the past have collapsed amid pushback from litigation finance proponents, who say it puts plaintiffs on a level playing field with big business.
The complexity and impassioned views surrounding legal finance might explain why Tuesday's meeting featured several stretches of prolonged silence after the full committee's members were asked to weigh in.
"Okay, folks, it would be really helpful if you have any input on this one way or another," U.S. District Judge Sarah S. Vance, the committee's chair, said after requests for feedback repeatedly failed to elicit any comments.
Among advisory committee members not serving on the subcommittee, U.S. District Judge Cathy Bissoon was one of the few to speak up.
"I don't see this as being any different from any other corporate disclosures that are made," Judge Bissoon said. "When we are dealing with folks in settlement negotiations, it's important to know who the players are."
Most of Tuesday's other comments came from subcommittee members, including Zachary D. Clopton, dean of the Northwestern University Pritzker School of Law. At one point, Clopton sought to spark conversation by asking if litigation finance is particularly problematic in specific practice areas.
"There may, in fact, be a problem, but [maybe] in patents it's different than in mass torts," Clopton said Tuesday. "In that situation, we have, on occasion, had rules that apply only in specific subsets of cases."
W. Mark Lanier of The Lanier Law Firm, a prominent trial lawyer who's also on the subcommittee, offered perhaps the most vivid remarks Tuesday. Disclosures allow lawyers to "quickly determine how much money is available" for their opponents' legal fees, Lanier said, and then "figure out how to spend them into oblivion."
"I have seen when it has been disclosed. … I was just an innocent bystander watching, but I was actually in the office of defense counsel, who was laughing about how he was going to be able to use it," Lanier added.
Federal Rule of Civil Procedure 45(b)
Rule 45(b) has long been interpreted to require hand delivery of subpoenas, fueling the growth of an entire industry of process servers. The advisory panel Tuesday approved revisions that would relax Rule 45(b) requirements.
The key revisions would allow subpoenas to be sent to someone's last known address via the U.S. Postal Service and commercial carriers, such as FedEx and UPS. It will also be sufficient to leave a subpoena "at the person's dwelling or usual place of abode with someone of suitable age and discretion who resides there."
Tuesday's approval occurred despite scores of critical comments, many of them facilitated by the National Association of Professional Process Servers, which claims thousands of members.
"I've now seen that organizational petitioners can fill our inbox," Richard L. Marcus, a committee adviser and scholar at the University of California College of the Law, San Francisco, said Tuesday.
As with all final approvals, additional clearance is still needed from other entities, such as the Committee on Rules of Practice and Procedure, or Standing Committee. Those approvals are typically formalities, since advisory committees consult the higher-ups before advancing new rules.
Federal Rule of Civil Procedure 45(c)
Another final approval Tuesday covered changes to Rule 45(c), which deals with subpoenas for witnesses to attend trials, hearings and depositions.
The tweaks would essentially override a Ninth Circuit ruling in 2023 that limited judicial power to compel remote testimony from witnesses not residing sufficiently close to relevant courthouses. Under the revamped Rule 45(c), subpoena power would extend nationwide, so long as witnesses don't have to travel too far to remotely testify.
Lawyers for Civil Justice, a coalition of BigLaw firms and major corporations, said in a February letter that the changes are "inextricably linked" with emerging revisions to Rule 43(a), which also implicates remote testimony. But a committee memo balked at the LCJ's desire for amendments in "one comprehensive package," saying the Rule 43(a) revamp will come up for a vote at a future meeting.
Federal Rule of Civil Procedure 43(a)
Although a Rule 43(a) vote is still months away, Tuesday's meeting featured robust discussion of possible alterations. The rule currently states that remote trial testimony, as opposed to in-person testimony, can be allowed "for good cause in compelling circumstances and with appropriate safeguards."
The advisory committee is looking to delete the "compelling circumstances" condition, but Standing Committee members expressed significant reservations at a January hearing.
"We got feedback that was not fully anticipated from the Standing Committee," U.S. District Judge M. Hannah Lauck, who chairs the panel's Rule 43 subcommittee, said Tuesday.
The main concern is further deterioration of jury trials that have generally become less common. In response, members are working to flesh out detailed safeguards and to compile firsthand anecdotes about positive experiences with remote trial testimony.
Andrew Bradt, a professor at the University of California, Berkeley School of Law, described that effort at Tuesday's meeting.
"It might be useful to ask both the judges and practitioners in the room about their experiences with appropriate safeguards," Bradt said. "One of the things that we've heard is that often when there are remote witnesses, it's pretty copacetic."
Federal Rule of Civil Procedure 23
Rule 23 governs class actions, and committee members in October greenlighted the exploration of possible changes to three areas. Those areas included payouts to class counsel, certification standards and financial perks for plaintiffs.
As with Rule 43(a), the Standing Committee "expressed skepticism," according to a meeting memo that cited concerns about "a substantial, if not all-consuming, project."
"I think it's fair to say that we were met with limited enthusiasm," Bradt said Tuesday. He added that "we're not quite sure what the class action world is going to look like" in the aftermath of Trump v. CASA,
where the U.S. Supreme Court last year curtailed universal injunctions, triggering an immediate spike in class cases.Committee member David C. Wright III, a lawyer at Robinson Bradshaw & Hinson PA, said Tuesday the rules panel "should seriously continue to monitor" the issue because "this really is an area of the law that has significant impacts nationwide."
But Wright added that shelving the issue is reasonable for now, given that litigation finance will be a hefty undertaking.
"Third-party litigation funding — I mean, that's a bear, and we've got to wrestle that to the ground," Wright said. "I would certainly prioritize something like that beyond this."
The Standing Committee's next meeting is June 3-4 in Chicago. The civil rules committee's next meeting is Oct. 21 in Washington, D.C.
--Editing by Lakshna Mehta.
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