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In 2022 and 2023, the Florida Legislature handed, and Gov. Ron DeSantis signed into regulation, intensive reforms to place an finish to years of unchecked authorized system abuse and claims fraud.
However, as a result of billboard legal professionals use a bunch of abusive advertising and litigation ways to reap the benefits of weak Floridians and make a mockery of our court docket system, further motion is required.
One particularly regarding authorized system abuse development is third-party litigation financing. This booming and largely unregulated business permits lenders who don’t have any relationship to the claimant or problem being litigated to secretly put money into a lawsuit in change for a portion of the settlement. Due to the present lack of regulation, these lenders are in a position to cost exorbitant rates of interest — typically nicely over 200%. Whereas an injured particular person’s authorized payments could be lined within the brief time period, they typically see little — if any — of the award or settlement when and if a choose or jury finds of their favor.
These lawsuit lenders are sometimes hedge funds or overseas actors, and with none disclosure and transparency protections at present in place, courts and defendants have no idea when one is concerned or who they’re. This gives a regarding alternative for overseas entities to secretly use our court docket system to threaten our financial and safety pursuits.
A current report entitled “A New Risk: The Nationwide Safety Threat of Third Celebration Litigation Funding” shines a lightweight on the safety dangers and hazard posed by litigation financing. By way of funding frivolous litigation, overseas entities might overwhelm courts, goal particular litigation to weaken important industries or acquire confidential supplies by means of discovery.
Latest revelations in litigation verify that these concerns are authentic because it has been disclosed that overseas governments and overseas actors are investing in delicate mental property litigation in america.
Sadly, third-party litigation financing is rising quickly. Westfleet Advisors, a litigation finance advisory agency, discovered investments in U.S. litigation financing rose to $13.5 billion in 2022, with new capital commitments rising by practically 16% 12 months over 12 months. Moreover, the main financier of litigation has seen its property improve 355% over the past a number of years, together with the addition of practically $1 billion on the finish of 2018 by an unknown, overseas sovereign wealth fund.
As litigation financing turns into extra prevalent, injured people usually are not the one ones falling sufferer to those schemes — companies are too.
In 2023, restaurant meals distributor Sysco Corp sued Burford Capital Restricted — who was offering financing for litigation — for blocking its determination to settle its antitrust litigation. That is one other instance of a funder interfering with a plaintiff’s determination concerning their court docket case and additional elevating moral issues round litigation financing and the position of funders.
This secretive and unregulated observe will increase frivolous lawsuits and contributes to increased litigation prices, that are then handed onto households and companies. Because of this, research have proven that customers pay increased prices for on a regular basis objects, from gasoline and groceries to insurance coverage.
Florida has a chance to cleared the path in tackling this extraordinarily troubling problem. This Session, the Florida Legislature is contemplating common sense reforms, together with transparency and disclosure in third-party litigation financing, to revive stability to our court docket system. Laws by Sen. Jay Collins and Reps. Tommy Gregory and Toby Overdorf will deliver much-needed transparency to this business whereas defending customers and preserving the integrity of our court docket system.
We encourage lawmakers to move these essential shopper safety payments to construct on the historic reforms handed final 12 months and additional rein in authorized system abuse in Florida.
Doing so will profit and assist shield all Florida customers and companies.
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Logan McFaddin is vice chairman of state authorities relations for the American Property Casualty Insurance coverage Affiliation.
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