A new Mississippi law takes aim at foreign third-party litigation funding.
Gov. Tate Reeves has signed Senate Bill 2747, which was known as the Transparency in Consumer Legal Funding Act. Reeves signed the bill April 8 after it was passed by the Legislature days earlier.
Once it becomes law July 1, it will require funders to disclose the citizenship or country of incorporation of any “foreign entity of concern” tied to a lawsuit payout. Those disclosures must be filed with the Attorney General within 30 days of signing the deal or filing the lawsuit.
The goal is to stop foreign entities from gaining access to sensitive or proprietary information through these funding deals.
While the law will help shine a light on all litigation funding, one group particularly excited about its passage is the Owner-Operator Independent Drivers Association.
The group says truck drivers are being slammed with costly and often unnecessary personal injury lawsuits. As with many other small businesses, one lawsuit could force a truck driver to make a permanent pit stop because of the high cost of fighting litigation. Companies that hire, represent or insure truck drivers face the same situation.
OOIDA says many trucking lawsuits are powered by outside investors looking for a quick buck. It says such litigation can drive up costs and drag cases out even longer and can make fair settlements more difficult to reach because a third party is focused on profit rather than resolution.
The U.S. Chamber of Commerce Institute for Legal Reform supports
“Outside entities, sometimes even foreign governments, bankroll lawsuits for a hefty payday,” the IRL posted recently on LinkedIn. “It’s time to address a secretive practice hiding in our courts called third party litigation funding.
“A new law in Mississippi pulls back the curtain on who’s driving costly, drawn-out lawsuits across the state. It brings foreign third-party litigation funders to light. This is another meaningful step toward transparency in America’s courtrooms.”
Mississippi isn’t the only state dealing with the issue of foreign third-party litigation funding. Utah has passed similar legislation, while Missouri and Ohio have similar bills being considered.
A report earlier this year also noted how third-party litigation financing is driving up costs for American consumers and families more than $600 per household annually when affordability remains a top concern across the country.
