Lawsuit money game exposed

Small-business owners aren’t just running a business. They’re one hard-hitting lawsuit away from shutting the doors for good.

The crushing cost of fighting litigation forces many small-business owners to settle fast. Plaintiffs’ lawyers know it – and they use it.

Now, lawmakers across the country are digging into who’s really funding litigation. They are also looking at how much it’s costing businesses, including trucking operations.

OOIDA says truck drivers are getting hammered with expensive, often unnecessary personal injury lawsuits. The companies that hire, represent or insure them are getting hit just as hard.

These cases don’t just hurt one business. They send shockwaves through the entire supply chain.

OOIDA says some of this litigation is fueled by outside investors chasing a payday. That can drive up costs and drag cases out longer. At a minimum, the Association wants plaintiffs to be upfront when a lawsuit is backed by outside funding.

Litigation funding occurs when outside investors pay for a lawsuit they think will win. In return, they take a cut of the settlement or award.

That setup can make fair deals harder to reach because a third party is focused on profit rather than resolution.

These investors back all kinds of cases, including truck crashes and other trucking disputes.

Over the past year, at least eight states have passed laws to rein in litigation funding. More states could be next.

Utah

Utah is one of the latest states to jump in. A new law targets a key piece of third-party lawsuit financing.

New consumer protections require litigation funders to register with the state – and pay a fee.

Another change gives consumers more time to walk away. The rescission window is extended from five days to 10.

The new law also cracks down on commercial maintenance funding providers.

They are now banned from paying referral fees to attorneys or healthcare providers. They’re also blocked from steering decisions in legal claims.

And there’s a hard stop on foreign ties. Providers cannot make deals with foreign entities of concern.

Foreign money in lawsuits is raising serious concerns for businesses.

Supporters warn that more “bad-faith foreign actors” are trying to use the U.S. courts against American companies.

Mississippi

Mississippi Gov. Tate Reeves signed a new law aimed at exposing who’s behind lawsuit funding. The focus is on foreign involvement.

The new law requires funders to disclose the citizenship or country of incorporation of any “foreign entity of concern” tied to a 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 players from gaining access to sensitive or proprietary business information through funding deals.

The law takes effect July 1.

Missouri

Missouri lawmakers are taking an even tougher stance – especially on foreign cash tied to litigation.

A bill nearing the finish line would block foreign players – and their middlemen – from funding cases in the state.

HB3205 would also require lawsuit funders to share legal responsibility for costs or penalties associated with the cases they bankroll.

Break the rules? The penalties could hit hard. Felony charges would be on the table for willful violations involving foreign actors.

Any deal that breaks the law would be thrown out.

“Missourians deserve to know who is really behind a lawsuit,” said Rep. David Casteel, R-St. Louis.

The Institute for Legal Reform says the bill would help keep courts focused on fair outcomes – not turning litigation into profit machines or tools for foreign influence. LL