A record number of bills targeting third-party litigation funding are under consideration across the United States, with Georgia and Kansas already passing disclosure measures, according to an analysis by Insurance Insider.
The U.S. Government Accountability Office defines third-party litigation funding as “an arrangement in which a funder who is not a party to the lawsuit agrees to help fund it.” Global multi-billion-dollar investing firms have made it their sole or primary business and are experiencing strong growth. Because the market lacks transparency, estimates on its size can vary but, according to Swiss Re, more than half of the $17 billion invested into litigation funding globally in 2020 was deployed in the United States. Swiss Re estimates the market will be as high as $30 billion by 2028.
Meanwhile, affordability of insurance coverage – especially for commercial auto products – has come under threat from increases in litigation and claim costs. The national surge in legislation seeking to rein in this practice reflects growing concerns about its lack of transparency and undue influence of litigation financing by dark-money investors – many of them outside the United States.
Thirty-five separate bills have been introduced in U.S. statehouses so far this year. The Kansas bill was signed into law by Gov. Laura Kelly, and the Georgia bill is expected to be signed by Gov. Brian Kemp. Similar legislation is advancing through various committees in Arizona, California, Massachusetts, New Jersey, and Oklahoma and have been proposed in more than two dozen other states.
The efforts are not only progressing at the state level. The U.S. House of Representatives is advancing HR 1109 – The Litigation Transparency Act of 2025 – which would regulate third-party litigation funding in federal court cases. A similar bill was introduced in 2024 but did not advance out of committee.
Third-party litigation funding is just one aspect of the larger issue of legal system abuse that contributes to challenges related to property/casualty insurance availability and affordability.
Learn More:
Indiana Joins March Toward Disclosure of Third-Party Litigation Funding Deals
Louisiana Litigation Funding Reform Vetoed; AOB Ban, Insurer Incentive Boost Make It Into Law
U.S. Study of Third-Party Litigation Funding Cites Market Growth and Scarce Transparency
IRC Study: Public Perceives Impact of Litigation on Auto Insurance Claims
Florida Bills Would Reverse Progress on Costly Legal System Abuse
Georgia Targets Legal System Abuse
Louisiana Reforms: Progress, But More Is Needed to Stem Legal System Abuse