Florida's push to regulate third-party litigation funding (TPLF) hit a roadblock in 2024 as key bills, HB 1179 and SB 1276, stalled in the House Judiciary Committee.
Aimed at increasing transparency and curbing funders' influence on legal strategies, the proposed legislation faced strong opposition from the trial bar, though supporters argue it would protect consumers and reduce frivolous lawsuits. Critics, including U.S. Senators Marco Rubio and Rick Scott, raised concerns about undisclosed foreign investments influencing U.S. courts. While the bills failed to advance, lawmakers plan to reintroduce them in the next session, as the debate over TPLF reform intensifies across the nation.
Third-party ligitation funding is a practice where non-parties finance litigation in exchange for a share of the proceeds.
According to a February report in Insurance Business Magazine, a bill in the Florida legislature aimed at increasing regulation on third-party lawsuit financing has stalled in the House Judiciary Committee, with slim chances of advancement before the session ends. While proponents of the bill argue it would curb frivolous lawsuits and protect consumers, its opponents, particularly members of the trial bar in the Florida House, played a significant role in blocking its progress. The bill sought to limit third-party involvement in legal strategies and mandate disclosure of such funding arrangements. Critics of third-party funding, like Mark Friedlander from the Insurance Information Institute, claim it contributes to rising litigation costs, which are passed on to consumers. However, the International Legal Finance Association praised lawmakers for halting the bill, arguing that concerns about third-party funding are overstated. Despite this setback, the bill’s sponsors plan to reintroduce it in the next legislative session.
On February 20, LexisNexis reported that Florida is taking significant steps to address concerns surrounding third-party litigation funding by proposing legislation aimed at increasing transparency in the practice. Recognizing the potential for abuse, state lawmakers have introduced companion bills — HB 1179 and SB 1276 — that would require full disclosure of third-party funders involved in lawsuits and prohibit them from influencing litigation strategies. These measures respond to concerns voiced by Rubio and Scott about the risks posed by undisclosed foreign investment in legal actions against American companies. Advocates for the bills argue that they will protect consumers and uphold the integrity of the judicial system, ensuring that decision-making authority remains with the plaintiffs. The bills have received support from various stakeholders, including the American Property Casualty Insurance Association, which highlights the predatory nature of undisclosed TPLF practices. With similar legislation being considered in multiple states, Florida’s initiatives may signal a growing movement toward regulating this previously opaque industry.
In August 2024, The Institute for Legal Reform issued a white paper focused on Third-Party Litigation Funding highlighting the lack of oversight and transparency in TPLF, noting that courts and opposing parties often remain unaware of such arrangements. The paper challenged the notion that TPLF enhances access to justice, arguing that it mainly benefits funders while potentially harming plaintiffs. It also explores concerns about foreign interests exploiting TPLF for financial or strategic gains. Additionally, the paper emphasizes growing judicial and legislative attention on the issue, with increasing calls for transparency and reform to protect the civil justice system from abuse.
On November 3, 2023, Rubio and Scott issued a joint press release addressing foreign third-party litigation funding (TPLF), which they say can allow foreign entities, including adversaries, to influence U.S. courts without being parties to the lawsuits. They sent letters to the chief judges of Florida’s federal districts urging the implementation of disclosure requirements for foreign TPLF to prevent potential misuse, such as promoting frivolous lawsuits and exerting control over litigation. The senators highlighted the risks of allowing undisclosed foreign funding, which could undermine judicial integrity and national security, particularly regarding critical infrastructure. They emphasized the need for transparency in the judicial system to protect against hostile foreign actors, advocating for common-sense disclosure measures to safeguard U.S. interests. As discussions continue, they encourage federal courts to inform the public about the scope of foreign TPLF and its implications.
In an August op-ed for Center Square, Taxpayer Alliance President David Williams wrote about how Florida led the charge in 2024 to regulate third-party litigation funding (TPLF) with House Bill 1179 and Senate Bill 1276 aiming to limit outside funders' influence in civil litigation. The proposed legislation sought to bar funders from making key legal decisions, a response to concerns that TPLF encourages frivolous lawsuits and prioritizes profit over justice. Although both bills stalled, proponents plan to reintroduce them next year, emphasizing the need for transparency and fairness. Florida, known for its 2023 tort reform successes, remains committed to leading legal reform efforts that balance economic growth and accountability.