Do I Have to Disclose Litigation Funding in My New York Personal Injury Case?
If you’re pursuing a New York personal injury claim and you used, or considered, pre-settlement funding, you might ask if the defense can force you to hand over your funding agreement, applications, communications, or payoff terms.
This has recently become more relevant thanks to a recent First Department decision, Lituma v. Liberty Coca-Cola Beverages LLC, 2025 NY Slip Op 06389. Due to this case, the defense bar has already begun arguing they can obtain this information in every case. But reality is narrower than what the defense now argues.
What Lituma actually says about litigation-funding discovery
In Lituma, the First Department upheld discovery related to that plaintiffs’ litigation funding history, reasoning that on the record presented, those materials could be “material and necessary” because they could reveal a financial motive to fabricate the accident. This was supported by New York's broad discovery rules under CPLR 3101(a). However, Lituma did not purport to create a blanket rule that funding is automatically discoverable in every injury case.
Two details in Lituma that the Defense likes to gloss over
1) The Lituma defendants had a fraud affirmative defense and counterclaim in their amended answer
The Lituma decision notes that Supreme Court had allowed defendants to include a fraud affirmative defense and counterclaim in an amended answer, something that is not typically plead in a personal injury case. In Lituma, the defendants were litigating (at least as plead) on a theory that the incident was fabricated.
2) The Lituma plaintiffs did not preserve certain arguments for appeal
The First Department also expressly noted that the plaintiffs did not appeal the order that allowed the fraud affirmative defense/counterclaim, and did not raise certain arguments in opposition to the motion at issue, so the appellate court was not in a position to entertain those arguments.
Will Lituma encourage “boilerplate” fraud allegations just to seek funding discovery?
It’s a fair concern. Any time a decision connects a category of discovery to a particular theory, you’ll see more pleadings trying to invoke that theory. But there are real constraints in New York practice:
Fraud must be pleaded with particularity. CPLR 3016(b) requires that where a cause of action or defense is based on fraud, “the circumstances constituting the wrong shall be stated in detail.”
Frivolous conduct carries sanctions risk. New York courts have authority to impose costs/sanctions for frivolous conduct under 22 NYCRR 130-1.1. A fraud allegation made merely to obtain litigation funding history could very well be seen as frivolous.
None of that guarantees a defendant won’t try to obtain this information. Unless or until the statute or case law changes, however, a plaintiff's attorney may well be served by objecting to the provision of such materials and not merely accept defendant's tactics.
How this fits with other decisions
Courts have repeatedly recognized that litigation-funding discovery is not automatic and cannot be used as a backdoor “financial audit.” The First Department held in Worldview Entertainment Holdings, Inc. v. Woodrow that such demands are improper where the requesting party “has not explained how discovery about litigation financing and witness payments would support or undermine any particular claim or defense.” In the same vein, Benitez v. Lopez is commonly cited for the point that “the financial backing of a litigation funder is as irrelevant to credibility as the Plaintiff’s personal financial wealth, credit history, or indebtedness.”
Even Lituma underscores there is no blanket rule. The First Department merely permitted funding discovery on the record before it, in a case where defendants had asserted a fraud-based affirmative defense/counterclaim. It expressly declined to reach certain arguments because they were not preserved for appellate review.
Bottom line
We suspect the defense will cite Lituma aggressively (and incompletely). But it is best understood as a record-driven discovery ruling, not a universal rule that plaintiffs must disclose litigation funding in every New York personal injury case.
If the defense demands litigation-funding materials, the fight typically comes back to the basics: whether the request is actually “material and necessary” to the claims and defenses in your case, or whether it is a collateral fishing expedition into private finances.
Beyond that, Defendants should be cautious about turning a personal injury case into a broad audit of a plaintiff’s financial life. Once a party starts treating private finances as fair game without a concrete, case-specific reason, it invites reciprocal discovery in kind. In other words, if a plaintiff’s borrowing, credit history, and private funding arrangements are supposedly “relevant,” then the same logic can be aimed back at the defense and its perhaps its insurer, prompting expensive side litigation that has nothing to do with how the accident happened or what injuries were caused.
Disclaimer: This post is for general information only and is not legal advice. Every case is different.