A file variety of payments concentrating on third-party litigation funding are into consideration throughout the United States, with Georgia and Kansas already passing disclosure measures, in accordance with an evaluation by Insurance Insider.
The U.S. Government Accountability Office defines third-party litigation funding as “an arrangement in which a funder who is not a party to the lawsuit agrees to help fund it.” Global multi-billion-dollar investing corporations have made it their sole or main enterprise and are experiencing sturdy development. Because the market lacks transparency, estimates on its dimension can differ however, in accordance with Swiss Re, greater than half of the $17 billion invested into litigation funding globally in 2020 was deployed within the United States. Swiss Re estimates the market shall be as excessive as $30 billion by 2028.
Meanwhile, affordability of insurance coverage protection – particularly for industrial auto merchandise – has come below menace from will increase in litigation and declare prices. The nationwide surge in laws looking for to rein on this apply displays rising considerations about its lack of transparency and undue affect of litigation financing by dark-money traders – lots of them outdoors the United States.
Thirty-five separate payments have been launched in U.S. statehouses thus far this 12 months. The Kansas invoice was signed into regulation by Gov. Laura Kelly, and the Georgia invoice is anticipated to be signed by Gov. Brian Kemp. Similar laws is advancing via varied committees in Arizona, California, Massachusetts, New Jersey, and Oklahoma and have been proposed in additional than two dozen different states.
The efforts aren’t solely progressing on the state degree. The U.S. House of Representatives is advancing HR 1109 – The Litigation Transparency Act of 2025 – which might regulate third-party litigation funding in federal court docket instances. An analogous invoice was launched in 2024 however didn’t advance out of committee.
Third-party litigation funding is only one side of the bigger challenge of authorized system abuse that contributes to challenges associated to property/casualty insurance coverage availability and affordability.
Learn More:
Indiana Joins March Toward Disclosure of Third-Party Litigation Funding Deals
Louisiana Litigation Funding Reform Vetoed; AOB Ban, Insurer Incentive Boost Make It Into Law
U.S. Study of Third-Party Litigation Funding Cites Market Growth and Scarce Transparency
IRC Study: Public Perceives Impact of Litigation on Auto Insurance Claims
Florida Bills Would Reverse Progress on Costly Legal System Abuse
Georgia Targets Legal System Abuse
Louisiana Reforms: Progress, But More Is Needed to Stem Legal System Abuse