TALLAHASSEE, Florida – Two bills filed in the Florida Legislature focus on regulating third-party litigation funding.
Basabe
House Bill 1157 was introduced January 9 by Rep. Fabian Basabe (R-Miami Beach).
The bill would bring stricter oversight to the fast‑growing industry of third‑party litigation financing, where outside companies fund lawsuits in exchange for a share of any recovery. It would require courts in certain cases to consider potential conflicts of interest created by these funding arrangements and would spell out how and when parties must notify others that a litigation financing agreement exists.
The measure also defines what information does not have to be disclosed, seeking to balance transparency concerns with confidentiality around the financial terms of the deals.
It would bar litigation financiers from engaging in certain prohibited conduct and would place extra limits on foreign funders involved in Florida cases. Under the bill, some litigation financing agreements could be deemed void and unenforceable if they violate the new standards, and violations could be pursued under the Florida Deceptive and Unfair Trade Practices Act.
The bill would require courts to determine if litigation funding agreements could impair counsel’s ability to adequately and fairly represent parties in a lawsuit by examining potential conflicts of interest that could arise from the third-party financing agreements.
Third-party financiers would be prohibited from directing or making decisions regarding the conduct of a lawsuit, including restrictions on appointing counsel or choosing expert witnesses. The bill also would cap financial returns for these funders by preventing them from receiving a larger share of any settlement than what the plaintiffs receive. It also would prohibit payment of commissions or referral fees.
The bill also includes provisions related to foreign financing, requiring disclosure of the agreement and identification of the person or groups involved.
A similar bill stalled in a previous session.
Burton
The companion Senate Bill 1396, introduced by Sen. Colleen Burton (R-Winter Haven), also was filed January 9.
Only eight states – Georgia, Indiana, Kansas, Louisiana, Montana, Oklahoma, West Virginia and Wisconsin – have laws regulating third-party litigation funding on the books. But Washington also is considering a bill now.
Florida has seen several legal reforms in recent years, and the U.S. Chamber of Commerce’s Institute for Legal Reform says those actions “are generating dividends – literally.”
Florida Gov. Ron DeSantis and Insurance Commissioner Mike Yaworsky announced about 2.7 million Progressive customers in Florida will receive a rebate of about $300 each on premiums because of these reforms.
Some of the key 2022 reforms ended the practice of automatically adding attorney expenses to disputed auto insurance claims settled in court. That change removed an incentive for attorneys to take these cases and reduced the number of new lawsuit filings dramatically in recent years.
“Florida was really … considered a litigation hellhole by a lot of folks and that contributed to consumers having to bear more cost with respect to auto insurance,” DeSantis said, also noting that rates for both auto and property insurance are declining, along with frivolous litigation.
“This year, Florida’s top five auto insurers are averaging over a 6% rate reduction, and we've secured nearly $1 billion in credits for Progressive auto policyholders – and the other carriers are expected to follow suit soon,” DeSantis said. “Also, 17 new companies have entered the homeowners’ market, 33 companies have filed for rate decreases and reinsurance market rates have declined.”
