TALLAHASSEE -- With Florida’s third party funding of civil litigation under the microscope, a Florida Association of Insurance Agents official cautions that the growing industry could potentially be increasing frivolous filings.
“It certainly doesn’t do anything to decrease the chances,” said Jeff Grady, president and chief executive officer of the FAIA. “To the extent third parties actively solicit lawsuit funding opportunities, it only encourages more litigation.”
The litigation funding industry includes third parties that finance civil litigation, such as a class action lawsuits, in return for a percentage of a jury award or settlement. Many believe third party funding contracts should be disclosed to juries - something state legislators may take up next session.
“Whether disclosure is prejudicial to the outcome would likely depend on the circumstances, but generally speaking, full transparency is preferable,” Grady said, adding that litigation funding should also be regulated like other lending industries.
“Almost all forms of lending are regulated at some level – mortgages, commercial/consumer, pay-day loans,” Grady said. “Litigation financing is yet another with different terms and conditions that may result in less than desirable outcomes. For those reasons, this form of lending should have oversight.”