What's Happening?
The American Property Casualty Insurance Association (APCIA) is advocating for the passage of two bills by the House Judiciary Committee aimed at increasing transparency in litigation funding. The Litigation
Transparency Act of 2025, introduced by Rep. Darell Issa, R-Calif., mandates the disclosure of third-party litigation funding in federal civil cases. Additionally, the Protecting Our Courts from Foreign Manipulation Act of 2025, introduced by Rep. Ben Cline, R-Va., requires disclosure of litigation funding by foreign entities and prohibits foreign governments from investing in federal court litigation. APCIA's senior vice president, Sam Whitfield, emphasized the need for these reforms to bring accountability to groups treating the courtroom as an investment product. The insurance industry has long criticized litigation funding for driving up costs, with a report from The Perryman Group highlighting a $368 billion annual burden on the U.S. tort system.
Why It's Important?
The proposed legislation is significant as it addresses the growing concern over third-party litigation funding, which the insurance industry claims is a major factor in rising litigation costs. By requiring transparency, these bills aim to curb the influence of foreign entities and shadow groups in the U.S. legal system, potentially reducing the economic burden on consumers. The insurance industry argues that excessive litigation funding contributes to inflation, affecting household expenses such as prescriptions and insurance premiums. If passed, these reforms could lead to a more equitable legal system and lower costs for consumers.
What's Next?
The House Judiciary Committee is scheduled to mark up the bills, which could lead to further legislative action. If the bills pass, they may face challenges in the Senate, where previous attempts to reform litigation funding through tax changes were thwarted. Stakeholders, including the insurance industry and consumer advocacy groups, will likely continue to lobby for or against these measures, influencing their potential success. The outcome could set a precedent for future legislation aimed at regulating litigation funding.
