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State of Illinois - Part II Country Report - Handbook on Third-Party Funding in International Arbitration

Author(s): 
Lawrence Schaner
Page Count: 
12 pages
Published: 
March, 2018
Jurisdictions: 
United States,
Illinois
Practice Areas: 
Parties,
Third Parties in Arbitral Proceedings,
Confidentiality,
Arbitral Process,
Representation and Legal Assistance,
Costs and Damages,
Apportioning of Costs,
Deposit of Costs,
Expenses of Parties

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Description: 

Originally from Handbook on Third-Party Funding in International Arbitration

1.1.   TPF Regime in Illinois

This chapter summarizes the status of Third-Party Funding of litigation and arbitration in Illinois. Specifically, this chapter identifies that there are no statutes or case law directly dealing with the regulation of Third-Party Funding or funders. Furthermore, while legal restrictions to Third-Party Funding exist in Illinois such as criminal statutes prohibiting maintenance and barratry, courts are reluctant to apply these statutes to bar Third-Party Funding. Illinois case law suggests that disclosures to funders may waive the attorney-client privilege; however, work product protection is more likely to be preserved, particularly where the funder and the litigant have entered into a confidentiality agreement. Finally, abiding by the ABA’s Model Rules of Professional Behavior, which the Illinois Rules of Professional Conduct largely mirror, can help counsel mitigate the ethical concerns of representing clients using Third-Party Funders, and can diminish the risk of unintentionally entering into an attorney-client relationship with the funder. 

1.1.1. Are there any statutes or case law dealing with TPF or regulating Funders? If yes, please address these.

There are no statutes or case law that directly speak to the regulation of third-party funding or funders in Illinois. 

In Illinois, there are currently no statutes that directly regulate Third-Party Funding or funders, but there have been attempts to regulate the industry through legislation. In 2014, Senate Bill 3391 was introduced in the Illinois General Assembly by Senator Dale.  Senate Bill 3391 would have created the Non-Recourse Consumer Lawsuit 

Funding Act, which would have imposed a number of regulatory requirements on Third-Party Funders.  Ultimately, the bill failed to pass.  

In 2015, another attempt was made to pass the Non-Recourse Consumer Lawsuit Funding Act, this time by Senator Haine who proposed Senate Bill 1397.  Senate Bill 1397 is identical to Senate Bill 3391. Senate Bill 1397 has yet to see any significant movement after being proposed.