Two Louisiana bills that would put a brake on the burgeoning litigation finance industry have passed their first hurdle as lawmakers hope to take advantage of a gubernatorial change after an effort last year failed due to a veto. I moved forward.
One bill would require parties to disclose litigation funding agreements within 60 days of filing a civil lawsuit. The state House approved the measure and it is being considered by the Senate Judiciary Committee.
The second bill would require parties to disclose the existence of litigation funds in litigation if the source of the funds is a foreign corporation. The bill has passed the state Senate and House Civil Law and Procedures Committees and must be approved by the full House.
The bill is part of a move by several states to limit the practice of investors paying legal fees in exchange for a portion of the proceeds if they win. The U.S. Chamber of Commerce is pushing for the bill, saying the $15.2 billion litigation finance industry encourages frivolous lawsuits.
Democratic Gov. John Bel Edwards last year vetoed a bill from the Republican-controlled Louisiana House and Senate that would require disclosure of litigation funding, arguing that it would give big companies an advantage in civil litigation. . Republicans, who once again have a majority in both states, are hoping for a different outcome this year with fellow Republican Jeff Landry taking over as governor.
Republican Rep. Emily Chenevert created a disclosure bill (HB336) modeled after the bill Edwards vetoed earlier this year. This allows parties to edit the amount funded, the contract is subject to discovery, and the funder cannot direct or influence litigation.
“There was already a willingness within Congress to say, let's give this a go, let's see what happens with the new House and some new senators,” Chenevert said in an interview. “I'm working on it,” he said. “Let's try again, let's try again.”
Chenevert's bill was adjourned in the Senate Judiciary Committee after the chair announced that 56 supporters and 67 opponents were present to speak at the hearing. A new date has not yet been decided.
A second bill (SB355) filed by state Senate Majority Leader Jeremy P. Stein would require the state attorney general to disclose lawsuits sponsored by relevant foreign governments, including China, Russia, and Iran. ing. This mirrors legislation introduced at the federal level by Sen. John Kennedy (R-LA) and House Speaker Mike Johnson (R-LA) last year.
Other bills
Litigation funding bills face mixed outcomes in the state Legislature. Indiana enacted a law earlier this year that blocks foreign companies from funding lawsuits.
West Virginia updated its current law to include litigation financing. The law requires investors to provide consumers with copies of contracts, and prohibits companies from transferring contracts to others or securitizing them.
In Florida, a bill to require disclosure of litigation financing agreements and foreign investments stalled in the House. A bill is pending in Kansas that would allow discovery of litigation funding agreements.
The U.S. Chamber of Commerce supports the national effort and warned of the risks of litigation funding earlier this month.
Matt Webb, senior associate director of the chamber's Justice Reform Institute, wrote that the external funding “results in minimal risk for plaintiffs in filing lawsuits, meritorious or not.” . “This dynamic often puts pressure on companies to settle to avoid the expense and uncertainty of protracted litigation, even if the claims against them are without merit.”
In Louisiana, the Legislature supports Chenevert's bill, but calls Stein's proposal “not comprehensive.” Stein's proposal “targets only foreign funds, but frankly there are many ways in which foreign funds could be put into U.S. investment vehicles and potentially affect litigation,” the Chamber of Commerce's Institute for Justice Reform said. said Deputy Director Nathan Morris.
Litigation finance has attorneys in state legislatures.
“The Chamber is trying to pass legislation that can be used as a domino effect in support of national regulations in states where there is no litigation funding, such as Louisiana,” said Dai Wai Chin Feman, managing director of funding firm Parabellum. “They're getting close on purpose.” capital.
He spoke out against Chenevert's bill on behalf of the International Legal Finance Association, an industry group, but said Stein's bill is “acceptable to our industry.”
