When a client considers litigation funding, the first review is not simply whether outside capital is available. Plaintiff attorneys should identify which court rules apply, whether disclosure is required, and whether the agreement preserves the client’s control over important decisions.

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That distinction matters. A resolution is not the same as an enacted statute, and a federal court order may govern a case differently from a Delaware state-court matter. The practical review begins by separating those authorities and then examining what transparency, disclosure, and potential funder influence mean for the case.

What Delaware Litigation Funding Regulations Actually Address

For attorneys, the phrase “Delaware litigation funding regulations” covers more than one type of authority. It can refer to state legislation, a court’s procedural order, a judicial opinion, or a proposed policy discussion. Those sources do not carry the same force. A careful review should identify which court is handling the matter, what kind of funding is involved, and whether a rule addresses disclosure, discovery, conflicts, or contract conduct.

SCR 127 is a study and invitation, not a comprehensive statute

Delaware Senate Concurrent Resolution 127 is titled an invitation for the Delaware judiciary to study transparency in third-party litigation funding. It discusses concerns about anonymous funding sources, possible direct or indirect funder control, and the effect of disclosure on identifying stakeholders with an interest in a case. The resolution also connects transparency and ethical standards with public trust in the judicial system.

Most importantly, SCR 127 does not itself enact a comprehensive litigation-funding statute. Its stated direction is for the Delaware Judiciary to study and, if appropriate, recommend revisions to court rules or statutes. Attorneys should therefore treat it as a policy and rulemaking signal, not as a standalone source of new obligations. The text is available in the Delaware legislative record for SCR 127.

State law and court procedure answer different questions

A state statute would generally establish requirements through enacted legislation. A court order, by contrast, may impose disclosure or procedural duties in the cases and court covered by that order. The distinction matters because a federal court’s standing order is not automatically a universal rule for every Delaware state-court case or every funding arrangement. The resolution records that the U.S. District Court for the District of Delaware issued a standing order concerning third-party financing disclosure on April 18, 2022. The scope and requirements of that order must be reviewed separately from SCR 127 and from Delaware statutory law.

A practical review scope for plaintiff counsel

Begin by locating the matter’s forum and assigned judge. Determine whether an applicable order reaches the arrangement. Check whether the funding is non-recourse and supports attorney fees or litigation expenses. Ask whether it involves a financial interest contingent on the litigation result. Next, review disclosure, conflict, confidentiality, and discovery implications. SCR 127 says disclosure can help parties make informed litigation-strategy decisions. That observation is not a universal Delaware filing rule.

This is educational information, not legal advice. Counsel should verify the current rule, order, and case-specific requirements before advising a client or making a filing.

How Delaware Litigation Funding Regulations Apply in the District of Delaware

The District of Delaware standing order is narrower than a rule governing every Delaware lawsuit. It applies to cases assigned to Chief Judge Connolly. Attorneys should therefore confirm the assigned judge and the case’s federal-court posture before treating the order as applicable. The order addresses disclosure of certain third-party litigation funding arrangements and sets out when the court may allow additional discovery. Read the primary District of Delaware standing order alongside the docket and current court guidance.

1. Confirm the order’s scope. First, determine whether the case is assigned to Chief Judge Connolly. The order defines a third-party funder as a person or entity that is not a party to the action. It covers arrangements that provide some or all of a party’s attorney fees or litigation expenses on a non-recourse basis. The order includes arrangements involving a financial interest contingent on the result of the litigation. It also describes certain exchanges of funding for a non-monetary result, subject to the order’s stated exclusions. Do not assume that a Delaware state-court case, or every federal case in Delaware, automatically falls within this standing order.
2. Calendar the disclosure deadline. For a covered arrangement, the disclosure is due within the later of 45 days after the order or 30 days after the filing of an initial pleading or the transfer of the matter to the District of Delaware. The order states that transfer includes removal of a state action. In practice, counsel should identify any funding arrangement early and calculate the deadline from the relevant filing or transfer event rather than waiting for a discovery request.
3. File a separate statement. The party receiving the funding must file a statement separate from any pleading. Treat this as a distinct filing requirement, not as information to bury in an answer, complaint, or other pleading. Confirm the court’s filing procedures and ensure the statement is complete before submission.
4. Identify each funder. The statement must provide the identity and address of each third-party funder. If the funder is a legal entity, it must also provide the entity’s place of formation. This information gives the court and other parties a clear record of who has a financial stake in the litigation, rather than leaving the funding source anonymous.
5. Describe approval rights. State whether any funder’s approval is necessary for litigation decisions or settlement decisions. If approval is required, briefly describe the nature of the terms and conditions governing that approval. This disclosure should accurately describe any contractual role that could affect strategy, resolution, or the timing of a settlement.
6. Describe the funder’s financial interest. The statement must briefly describe the nature of each funder’s financial interest. Keep the description tied to the actual arrangement and avoid characterizing the funding more broadly than the order requires.
7. Prepare for possible additional discovery. The order permits a party to seek additional discovery into funding terms upon a showing that the funder has authority to make material litigation or settlement decisions. Additional discovery may also be sought if the arrangement does not promote or protect the interests of funded parties or a class. The order also allows additional discovery when conflicts of interest exist or another good-cause basis is shown. The order does not prevent the court from ordering other appropriate relief. These provisions make accurate disclosure and careful review of control rights especially important.

This checklist is an educational starting point, not legal advice. The assigned judge, case facts, funding agreement, and later court orders may affect what counsel must disclose or produce.

How Do Disclosure and Discovery Issues Affect a Delaware Case?

Disclosure and discovery are related, but they are not the same obligation. In a covered District of Delaware case, the court’s standing order requires a party receiving certain third-party litigation funding to identify the arrangement and summarize key terms. That initial filing does not automatically open the entire funding agreement, communications, or litigation strategy to ordinary discovery.

The distinction matters because additional discovery may be available when the funder’s role goes beyond providing financial support. Under the standing order, a party may seek discovery into funding terms upon a showing that the funder has authority to make material litigation or settlement decisions. Discovery may also be appropriate if the arrangement does not promote or protect the interests of the funded parties. The order also allows additional discovery when the arrangement creates conflicts of interest or another good-cause basis exists. The order also preserves the court’s authority to grant other appropriate relief. Read the District of Delaware standing order.

Control rights can change the discovery analysis

For plaintiff counsel, the practical review starts with the agreement. Does the funder need approval before a settlement, dismissal, amendment, or other material litigation decision? If so, what are the conditions? The standing order specifically calls for disclosure of whether funder approval is necessary and, when it is, the nature of the terms governing that approval. Those provisions can become important if an opposing party argues that the funder has effective control or that the client’s interests are not being protected.

That does not mean every funding arrangement creates a conflict. It does mean counsel should identify who retains authority, explain the arrangement to the client, and assess whether any financial incentive could pull against the client’s litigation or settlement objectives. The Delaware resolution itself recognizes that direct or indirect funder control can create potential conflicts and that disclosure can identify stakeholders with an interest in the outcome. These are risk-assessment points, not a finding that funding is improper.

Work-product protection requires a case-specific analysis

A 2015 Delaware Court of Chancery opinion addressed whether documents prepared by or for a third-party funder and shared with counsel could qualify as work product. The court noted that the issue had not previously been answered in Delaware, applied Delaware’s “because of” test and explained that a document created because of litigation is likely to receive work-product protection. It also rejected the idea that seeking outside funding, by itself, eliminates protection merely because a claimant cannot finance litigation independently. Review the Delaware Court of Chancery opinion.

This opinion is not a universal statute or a guarantee that every funding document is protected. Its reasoning must be applied to the document, purpose, communications, and facts in the particular case. Counsel should also distinguish the court opinion from the District of Delaware standing order and review the separate funding disclosure obligations before deciding what to disclose or resist in discovery.

What Conflicts Should Plaintiff Attorneys Review?

Funding can help a client withstand the financial pressure of litigation, but it should not shift control of the case away from the client and counsel. A careful conflict review asks who decides strategy, what information is shared, and whether the arrangement supports the client’s interests throughout the matter. These questions are especially important when evaluating attorney funding resources.

Confirm who controls litigation and settlement decisions

Start by reading the agreement for any funder approval right. The District of Delaware standing order requires a disclosure to state whether a third-party funder’s approval is necessary for litigation or settlement decisions and, if so, to describe the related terms and conditions. The standing order also calls for a brief description of the funder’s financial interest.

That disclosure point is a practical warning sign for counsel. Ask whether approval rights could affect pleading decisions, discovery, motion practice, mediation, or the timing and amount of a settlement. The resolution that prompted discussion of Delaware litigation funding regulations identifies potential direct or indirect funder control as a source of conflicts of interest. It also explains that disclosure helps parties identify stakeholders with an interest in the outcome and make informed litigation-strategy decisions.

Protect the client’s interests and settlement authority

The client’s objectives should remain the foundation for legal advice. Counsel should confirm that the client understands the funding obligation, the financial interest of the funder, and how repayment may affect the client’s net recovery. Do not let a repayment obligation become an informal pressure to reject a reasonable settlement, prolong a case, or accept an unfavorable one.

Review whether the agreement gives the funder authority to make material litigation or settlement decisions. Under the standing order, that authority can support a request for additional discovery into funding terms. Additional discovery may also be available when the arrangement does not promote or protect the interests of funded parties, when conflicts arise, or when other good cause exists. Those provisions do not decide every ethical question, but they show why control terms deserve close attention before execution.

Limit confidential-information exposure

Identify exactly what case information the funder receives, who may access it, and how it may be used. Share only information necessary for evaluating or administering the arrangement, consistent with the client’s informed direction and counsel’s confidentiality obligations. Keep a clear record of the client’s authorization and the explanation provided about confidentiality risks.

Funding does not automatically eliminate protection for litigation materials. In a 2015 Delaware Court of Chancery opinion, the court applied the “because of” test and stated that needing outside funding. By itself, was not a persuasive reason to lose work-product protection. That decision should be reviewed for its precise facts and current relevance, not treated as a universal answer to every privilege or discovery issue.

Finally, document the client’s informed decision-making: alternatives considered, questions answered, control retained by client and counsel, and any unresolved concern referred for jurisdiction-specific advice. This article is educational, not legal advice. Delaware requirements can vary by court, case posture, and current orders.

What Should a Delaware Funding Agreement Make Clear?

A funding agreement should give the attorney and client a clear view of who is involved, what the funder can do, and how repayment is calculated. These are practical review questions, not a list of terms that every Delaware agreement must contain. The District of Delaware standing order does require certain disclosures in covered cases, including the funder’s identity, approval rights, and financial interest. A contract review should go further by testing whether the arrangement is understandable, transparent, and consistent with the client’s interests.

Key questions for reviewing a litigation funding agreement

Issue	Question to ask	Why it matters
Funder identity	Who is providing the money, and does the agreement identify the entity and its address?	The District of Delaware order calls for the identity and address of each funder, along with its place of formation when the funder is a legal entity. Read the standing order.
Approval rights	Can the funder approve, reject, or influence litigation decisions or a settlement? If so, what conditions apply?	The order requires disclosure of whether funder approval is necessary and, if it is, the nature of the terms and conditions. Those provisions also make control a central attorney-review issue.
Financial interest	How does the funder benefit from the case, and is the financial interest described in plain language?	The order requires a brief description of the funder’s financial interest. A precise explanation helps the client understand what may be owed and helps counsel identify potential conflicts.
Repayment basis	Is repayment tied to the amount advanced, the recovery, a fixed amount, or another formula? What happens if the case loses or resolves early?	The agreement should make the repayment calculation verifiable at each stage. Do not assume that a non-recourse label answers every question about timing, deductions, or the amount payable.
Fees and interest	Are there application, administrative, renewal, or other fees? Is interest simple or compounded, and when does it accrue?	Separating principal, fees, and interest lets the client evaluate the likely effect on a future recovery. Ask for an example payoff calculation rather than relying on a percentage alone.
Client counseling	Has the client had a meaningful opportunity to ask questions and decide without pressure? Does the agreement preserve the attorney’s independent judgment?	Funding should address hardship without steering litigation strategy or settlement decisions. The order permits additional discovery when control, inadequate protection of funded parties, conflicts, or other good cause is shown. Review ethical funding considerations.

For current terms from a particular provider, review the provider’s own disclosures and agreement rather than inferring terms from Delaware litigation funding regulations. The attorney and client should understand the economics before signing, and counsel should document any concerns about control, conflicts, or the client’s informed decision-making.

How The Milestone Foundation Approaches Ethical Consumer Funding

Ethical review does not end when an attorney confirms that funding may be available. The proposed agreement should also be understandable, financially transparent, and consistent with the client’s interests. That review is especially important when attorneys are researching Delaware litigation funding regulations. A funder’s voluntary terms should not be mistaken for a Delaware statutory requirement, court rule, or rate limit.

A nonprofit model built around transparency

The Milestone Foundation is the first and only nonprofit consumer litigation funding organization in the United States, and it is a 501(c)(3) nonprofit. Its stated model is mission-driven rather than a typical lawsuit-loan company. The goal is to provide fair funding that helps plaintiffs manage essential expenses while a civil case proceeds, without creating avoidable pressure to accept an unfavorable settlement.

That distinction matters during client counseling. Attorneys should explain what the agreement says, how repayment is calculated, and what happens if the case does not succeed. The client should have an opportunity to ask questions and make an informed decision. Attorney participation is required for an application: the plaintiff must have legal representation, and case details are reviewed with the attorney for approval or acknowledgment.

Simple interest, stated clearly

The following are The Milestone Foundation’s terms, not Delaware law and not a description of every funding provider’s practices:

• Pre-settlement funding carries 15% simple annual interest.
• Post-settlement funding carries 10% simple interest.
• Interest never compounds.
• Funding is non-recourse, so the plaintiff owes nothing if the case is lost.
• The Foundation does not charge hidden fees.

Simple interest means the charge is calculated from the agreed funding amount rather than repeatedly added to a growing balance. Compound interest, by contrast, calculates new interest on previously accrued interest. Asking the funder to demonstrate the calculation in dollars can help the client understand the potential repayment obligation before signing.

These features do not answer every Delaware legal or case-specific question. Counsel should still review applicable court orders, disclosure expectations, conflicts, confidentiality concerns, and the agreement’s settlement and repayment provisions. For a closer look at the organization’s approach, see ethical funding considerations. Attorneys and clients can also review current funding terms through the Foundation’s application information.

Frequently Asked Questions

Is litigation funding legal in Delaware?

Litigation funding is not automatically prohibited, but the governing requirements depend on the court, case, and funding arrangement. Attorneys should distinguish Delaware law from federal court orders and review whether disclosure, conflicts, or additional discovery requirements apply. This article is educational, not legal advice.

Does Delaware require disclosure of third-party litigation funding?

In cases assigned to Chief Judge Connolly in the U.S. District Court for the District of Delaware, a standing order requires a separate funding disclosure statement. The order covers certain non-recourse arrangements and sets a deadline tied to the order, filing of an initial pleading, or transfer to the district. The statement must identify the funder, address, place of formation when applicable, financial interest, and any approval rights over litigation or settlement decisions. Read the standing order.

Can a Delaware court order discovery of funding documents?

Potentially. Under the District of Delaware standing order. A party may seek additional discovery into funding terms upon a showing that the funder can make material litigation or settlement decisions. The arrangement does not protect funded parties’ interests, conflicts exist, or other good cause supports discovery. The order does not make every funding file automatically discoverable.

What conflicts should attorneys evaluate?

Counsel should examine whether the funder can influence litigation strategy or settlement, whether the arrangement protects the client’s interests, and whether confidential information was shared. The Delaware resolution identifies direct or indirect funder control as a potential source of conflicts. The attorney’s duties to the client remain central, regardless of the funding source.

Did SCR 127 create a Delaware litigation funding statute?

No. Delaware Senate Concurrent Resolution 127 encourages the Delaware Judiciary to study transparency and, if appropriate, recommend procedural or statutory revisions. It should not be described as a newly enacted comprehensive funding statute. Review SCR 127.

Get started with attorney-aligned funding review

When a Delaware plaintiff is considering funding, a clear review can help counsel evaluate the agreement, client interests, and case-specific obligations before moving forward. The Milestone Foundation can discuss ethical funding options with attorneys and their clients, while keeping the attorney involved in the process.

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