Set national standard for smart consumer protections in litigation funding

As Florida’s economy continues to perform — and particularly given the state’s strengthened insurance marketplace, which continues to stabilize through reforms — legislation to address the growing risks of Third-Party Litigation Funding (TPLF) is a crucial tool for safeguarding our long-term prosperity.

Just as the title implies, can you imagine the impact in Florida if outside investors – including foreign adversaries –  are allowed to fund lawsuits, FOR PROFIT?

The Sunshine State would become a “lawsuit pipeline,” funneling lucrative profits to outsiders seeking to generate shocking returns on investment through predatory litigation, including those looking to fuel insurance fraud schemes.

Senate Bill 1396 takes aim at this very real threat by ensuring transparency and accountability measures to protect the integrity of Florida’s legal system and to safeguard the interests of all parties involved in litigation.

Enhanced transparency

As a critical starting point, SB 1396 mandates the disclosure of third-party funding arrangements in litigation. This transparency is essential to ensure that all parties  – including the courts – are aware of any external financial interests that may influence the proceedings.

By making these arrangements public, the bill helps to prevent conflicts of interest and promote fairness in the legal process.

Of critical importance, the bill also guards against exploitation from foreign adversaries and sovereign wealth funds from secretly weaponizing our courts to harass competitors, extract intellectual property from U.S. companies and evade sanctions.

Protection against abusive practices

The bill also aims to curb potential abuses by the TPLF, such as frivolous lawsuits driven by profit rather than genuine legal grievances. By requiring disclosure, SB 1396 deters funders from backing cases with little merit, thereby reducing the burden on the judicial system and ensuring that only legitimate claims are pursued.

Safeguarding Floridians

SB 1396 includes provisions to protect Floridians with legitimate legal claims from exploitative funding agreements. By regulating the terms and conditions of TPLF contracts, the bill ensures that plaintiffs receive a fair share of any settlement or award, preventing secretive funders from taking an excessive portion of the proceeds.

Promoting judicial efficiency

And finally, with greater transparency and reduced frivolous litigation, SB 1396 will contribute to a more efficient judicial system. Courts will be able to allocate resources more effectively by focusing on cases with genuine legal merit and reducing delays in resolving disputes.

Protecting Floridians from predatory third-party-funded litigation, preserving the integrity of our courts as a level playing field for all parties, and guarding against foreign interference are forward-thinking public policy measures that address the risks associated with TPLF while promoting transparency, accountability, and fairness in the legal system. This legislation sets standards for third-party funders, requiring adherence to ethical guidelines and best practices.

TPLF guidelines will foster a more responsible and reputable litigation-funding industry, benefiting those with legitimate claims and the legal system as a whole.

Through these consumer protections, Florida will take a significant step toward ensuring justice for all.

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Garrett Richter is a retired Republican lawmaker from Southwest Florida. A successful banking executive by profession, Richter served as a member of the Florida Senate from 2008 to 2016, representing parts of Collier and Lee counties. He served as Senate President Pro Tempore from 2013 – 2016 and as Chair and Vice Chair of the Banking and Insurance Committee. Before election to the Senate, Richter served one term in the Florida House, representing a Naples-based District from 2006 to 2008.