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Introduction
On September 30, 2026, the Delaware Superior Court entered an order amending Superior Court Civil Rule 26(b) to add new Rule 26(b)(3), titled “Litigation-funding agreements.” The amendment establishes a framework for limited discovery into the existence and key terms of agreements through which third parties fund litigation in exchange for a financial interest tied to the outcome of the case.
The new rule is the product of a multi-year process. In 2022, the Delaware General Assembly passed Senate Concurrent Resolution 127, encouraging the Delaware judiciary to study transparency in third-party litigation funding. The Delaware Supreme Court subsequently formed a Third Party Litigation Funding Committee, which issued its report and recommendations on June 30, 2023. The committee found that there did not appear to be issues with the current use of third-party litigation funding in Delaware state courts, and it limited its recommendations to transparency measures rather than substantive regulation.
This alert summarizes the key provisions of the new rule, discusses practical implications for litigants, and places the amendment in the broader context of similar measures adopted or proposed in other jurisdictions.
What the New Rule Does
Definition of a Litigation-Funding Agreement
New Rule 26(b)(3)(A) defines a “litigation-funding agreement” as an agreement between a party and a counterparty—other than an attorney representing the party—in which the counterparty agrees to pay the party’s litigation expenses and has both (i) a contractual right to repayment contingent on the outcome of the case and (ii) a contractual right to control aspects of the litigation, such as the right to approve any settlement.
Scope of Permitted Discovery
Under Rule 26(b)(3)(B), a party may obtain discovery regarding:
The existence of the litigation-funding agreement; the identity of the parties to the agreement; the respect in which the agreement satisfies the rule’s definition; and if applicable, the specific aspects of the litigation the counterparty has the right to control.
Limitations on Discovery
Rule 26(b)(3)(C) expressly prohibits discovery into:
The agreement itself or its contents; Case-related information the funded party provided to the counterparty; and Mental impressions, opinions, conclusions, or other work product of an attorney or representative of the counterparty.
For-Cause Exception and Admissibility
Notwithstanding these limitations, Rule 26(b)(3)(D) authorizes the Court, for cause, to order production of the portion of the agreement that provides a contractual right to control an aspect of the litigation, such as the right to approve settlement. Separately, Rule 26(b)(3)(E) provides that a litigation-funding agreement is not admissible at trial.
Renumbering
The order renumbers former subsections (b)(3) through (b)(7)—addressing trial preparation materials, experts, draft reports, attorney-expert communications, and privilege claims—as (b)(4) through (b)(8), with all internal cross-references updated accordingly.
The court’s announcement notes that the rule authorizes limited discovery and limits broader discovery in a manner comparable to existing Rule 26(b)(2), which governs discovery of insurance agreements.
Practical Implications
Scope limited to Superior Court. The amendment applies only to the Delaware Superior Court’s civil rules. Other Delaware state courts—including the Court of Chancery—have not (at least yet) adopted corresponding rules. The committee report noted that different courts may have different needs and may adopt their own rules. Practitioners should also be aware of judge-specific standing orders in the U.S. District Court for the District of Delaware.
Anticipate targeted discovery requests. Parties should expect discovery requests directed at the four categories of information authorized by Rule 26(b)(3)(B): existence of an agreement, identity of the parties, how the agreement satisfies the rule’s definition, and any control or settlement-approval rights.
Review control and settlement-approval provisions. Because the for-cause exception in Rule 26(b)(3)(D) permits court-ordered production of provisions granting control over litigation or settlement approval, parties with existing or prospective funding arrangements may wish to review the relevant provisions of their agreements.
Update discovery templates. The renumbering of former subsections (b)(3) through (b)(7) as (b)(4) through (b)(8) requires that existing discovery templates referencing these subsections be updated to reflect the new numbering.
Multi-forum considerations. Cases involving parallel proceedings in multiple jurisdictions will require a forum-by-forum review of applicable disclosure and discovery obligations, as rules and standing orders differ significantly across courts.
Federal developments remain pending. The federal Advisory Committee on Civil Rules has had proposals to amend Federal Rule of Civil Procedure 26(a)(1)(A) to require litigation-funding disclosure on its agenda for over a decade, and Congress continues to consider legislation in this area.
How Other Jurisdictions Compare
The following table summarizes selected state, federal-court, and legislative approaches to litigation-funding disclosure across jurisdictions:
| Jurisdiction | Source | Key Requirements |
| Delaware (Superior Court) | Civ. R. 26(b)(3) (eff. Sept. 30, 2026) | Limited discovery into existence, parties, definitional basis, and control rights of litigation-funding agreements; contents protected absent for-cause showing; agreement inadmissible at trial. |
| D. Del. | Standing Order (Chief Judge Connolly, Apr. 18, 2022) | In cases assigned to Chief Judge Connolly, parties receiving nonrecourse funding must disclose funder identity, whether funder has control over litigation or settlement decisions, and brief description of funder’s financial interest. |
| D.N.J. | L. Civ. R. 7.1.1 (eff. June 21, 2021) | Statement required where third-party funding exists; no negative statement required. |
| N.D. Cal. | Civil L.R. 3-15 | In proposed class, collective, or representative actions, certification of interested entities must include any person or entity funding prosecution of any claim or counterclaim. |
| Wisconsin | Wis. Stat. § 804.01(2)(bg) (eff. July 1, 2018) | First state to require disclosure; parties must provide, without awaiting a discovery request, any agreement under which a non-attorney person has a right to receive compensation contingent on and sourced from proceeds of the action. |
| West Virginia | W. Va. Code § 46A-6N-6 | Statutory disclosure requirements for litigation-funding agreements. |
| Kansas | Sub. for SB 54 (2025) | Agreement provided to court for in camera review; sworn statement within 30 days disclosing identity of contracting parties, control/approval rights, right to receive confidential materials, known relationships with adverse party/counsel/court, nature of financial interest, and foreign-of-concern funding. |
| Georgia | SB 69 (2025) | Registration of litigation financiers, restrictions on foreign-affiliated financiers, contract requirements, and discovery of litigation financing agreements in civil actions. |
| Federal (proposed) | Multiple bills; S. 3826 (2026) | Advisory Committee on Civil Rules has considered amendments to Fed. R. Civ. P. 26(a)(1)(A) for over a decade; at least five bills introduced in the current Congress, including the Litigation Funding Transparency Act of 2026, which would require disclosure of funder identity, foreign-funder status, and production of agreements in covered class and mass actions. |
Key Takeaways
- New Rule 26(b)(3) of the Delaware Superior Court’s Civil Rules creates a structured framework for limited discovery of litigation-funding agreements—balancing transparency interests against protections for agreement contents and work product.
- The rule’s two-part definition—requiring both outcome-contingent repayment and a contractual right to control aspects of the litigation—narrows the category of arrangements subject to discovery.
- Discovery is confined to four categories of information (existence, identity, definitional basis, and control rights); agreement contents and related work product remain protected absent a for-cause court order.
- The for-cause exception provides the Court with discretion to order production of control-related provisions when warranted.
- The rule expressly renders litigation-funding agreements inadmissible at trial.
- Practitioners should update discovery templates and review existing or prospective funding arrangements, particularly as to control and settlement-approval provisions.
- Litigation-funding transparency requirements vary widely across jurisdictions—from judge-specific standing orders to comprehensive legislation—necessitating forum-by-forum analysis in multi-jurisdictional matters.