Senate committee advances bill to increase transparency over lawsuit lending 

The state Senate Regulatory Affairs and Government Efficiency Committee on Wednesday passed legislation sponsored by Sen. Vince Leach (R-SaddleBrooke) to increase transparency over third party litigation funding, a growing practice where outside parties, including foreign funders, bankroll lawsuits in the United States.

What the bill does 

The bill would require that outside funding be disclosed to the court and all relevant parties.

The bill safeguards consumer control by prohibiting funders from influencing case outcomes and ensuring they cannot receive a larger share of the proceeds than any of the involved parties.

What is third party litigation funding?

Third-party litigation funding (TPLF) is when an entity or individual provides financial support for a lawsuit in exchange for a share of the settlement or awarded damages.

These entities, which are not directly involved in the lawsuit, can include private institutions, publicly traded companies, and sovereign wealth funds of foreign nations.

For more information on TPLF click here. 

The business community view 

“Third party litigation funding has grown to an estimated $15 billion industry in the U.S. Essentially what happened is funders pour money into lawsuits in exchange for the settlement,” said Courtney Coolidge, executive vice president of the Arizona Chamber of Commerce & Industry. “This is a simple transparency bill to ensure transparency in our courts, protect litigants and safeguard against foreign influence. This is not just an Arizona issue; several states have passed this with bipartisan support.” 

Coolidge sought to counter the claims from the litigation funding industry. 

“You’re going to hear today that this is going to hurt the little guy and prevent access to justice. That’s not the case; you’re not going to hear that from small business, but you’ll hear it from the funders themselves. While they claim to be looking out for the little guy their motives are simple, they are investing in for-profit litigation.”

Where stakeholders stand 

In addition to the Arizona Chamber, the bill is supported by the Arizona Manufacturers Council, the Arizona Lodging & Tourism Association, and the Arizona Trucking Association. 

Opponents of increased transparency are the Arizona Trial Lawyers Association and the International Legal Finance Association, as well as an Arizona-based litigation funder and the Arizona chapter of the National Organization of Women.