The New Jersey Business & Industry Association (NJBIA) has announced its strong support for legislation aimed at increasing transparency in civil liability lawsuits. The proposed bill, A-5566, would require all parties to be informed if a private equity firm or hedge fund is funding a plaintiff’s legal team in cases against New Jersey businesses.
The Assembly Financial Institutions and Insurance Committee had scheduled the bill for discussion but decided to hold it as amendments are still being considered.
“This bill addresses a challenging trend where private equity firms use the civil justice system as an investment vehicle by funding numerous lawsuits, brought on by unrelated parties in exchange for a share of the plaintiff’s monetary award,” said NJBIA Chief Government Affairs Officer Christopher Emigholz.
Emigholz stated that without transparency regarding third-party litigation funding, it becomes difficult to assess potential conflicts of interest because the real backers of lawsuits remain hidden. He also noted that this lack of disclosure can result in lengthy and expensive legal battles for defendants and courts.
“NJBIA represents thousands of businesses, small and large throughout the state, and we hear from them that New Jersey is too expensive,” Emigholz said. “We hear from them that there are too many regulations and it’s not easy to do business here. We also hear from them that our legal costs are excessive and it’s a problem for New Jersey’s business climate.”
One of NJBIA’s key priorities is protecting businesses from excessive litigation, which was highlighted earlier this year in its Blueprint for a Competitive New Jersey report intended for lawmakers and gubernatorial candidates.
Emigholz added that passing the bill is especially important for manufacturers in the state. “We want more things made in New Jersey, invented in New Jersey and researched and developed in New Jersey,” he said. “There are inherent risks in discovery and innovation that, if unchecked, threats of non-transparent litigation could stifle — especially in competitive industries.”
A similar version of the bill (S-4374) was advanced by the Senate Commerce Committee in June.
