Georgia Passes Bill to Regulate Third-Party Litigation Funding

News Summary

The Georgia Senate has unanimously passed Senate Bill 69, aimed at regulating third-party litigation funding (TPLF) to enhance consumer protection. This new legislation mandates TPLF providers to register, promotes transparency, and restricts foreign funding while capping profits. With penalties for non-compliance, the bill seeks to protect Georgia residents navigating legal challenges, aligning the state with a national trend towards stricter TPLF regulations.

Georgia Takes Action on Third-Party Litigation Funding

In a move that’s turning heads across the state, the Georgia Senate has passed Senate Bill 69 with a sweeping vote of 52 to 0. This piece of legislation, also known as the “Georgia Courts Access and Consumer Protection Act,” aims to tighten up regulations surrounding third-party litigation funding (TPLF). It’s definitely a topic that has stirred conversations among residents, especially those curious about how it may affect their rights and wallet in the legal landscape.

What is Third-Party Litigation Funding?

For those who might be scratching their heads wondering what TPLF is, it’s essentially when outside companies, not directly involved in a legal case, provide financial support to plaintiffs in exchange for a share of the settlement or judgment proceeds. While it sounds simple, there’s a lot of potential for concern, especially when it comes to the influence of these funders over legal strategies.

New Regulations in Place

The new law introduces a series of essential regulations, which aims to protect everyday people navigating litigation. Under the new rules, if you’re a TPLF provider, you’ll now have to register with the Georgia Department of Banking and Finance. This is a big step because it ensures these companies operate under a watchful eye.

But that’s not all! The bill puts restrictions on who can fund lawsuits, stating that any businesses linked to foreign entities are out of luck when it comes to registration. This measure could keep finances within the country and help ensure that funding comes from reliable sources.

Transparency and Accountability

Transparency is a big theme in Senate Bill 69. All TPLF providers now need to disclose any individuals or entities that hold 5% or more of their voting shares. This means that the parties behind the funding must be more transparent, improving accountability. Plus, significant safeguards are put in place to ensure that funders can’t manipulate legal strategies or decisions in the cases they back.

Protection for Consumers

To further protect consumers, the legislation prohibits these funders from paying referral fees or commissions to lawyers. It is also critical to note that funders are not allowed to report consumers to credit agencies if their financing runs out before they can repay it. This specific rule is particularly crucial for individuals already facing the stress of a lawsuit – it removes an extra layer of anxiety!

Profit Limits and Legal Discoveries

The profits for TPLF providers are capped to ensure that they can’t reap unjust financial gain from plaintiffs. They can only collect amounts that don’t exceed what a plaintiff ultimately recovers after taking into account legal fees and other costs. Moreover, TPLF agreements will now be subject to discovery during litigation. However, they won’t automatically become evidence unless they relate directly to the case at hand.

Strong Penalties for Non-Compliance

The legislation also introduces some stiff penalties for those who violate these rules, including hefty fines of up to $10,000 and even potential felony charges. The stakes are high, but this is intended to drive the seriousness of compliance home.

A Response to National Trends

Senate Bill 69 aligns Georgia with a growing trend in several states, including New Jersey, Indiana, Louisiana, and West Virginia, all of which are also moving to regulate TPLF. This shows that Georgia’s not just taking the easy route; they are part of a larger conversation about how to ensure that the civil justice system operates without undue influence from outside financial parties.

As the bill heads to the House for further deliberation, it’s clear that lawmakers believe these regulations are necessary to protect Georgia’s consumers. With more than $15.2 billion in assets managed by the U.S. commercial litigation funding industry as of 2023, the impact of this legislation could be huge, shaping not only the trajectory of litigation in Georgia but also lifting the protective lid on vulnerable plaintiffs.

Stay tuned, Georgia! This is a development that could have a lasting impact on your rights and protections should you find yourself in a legal struggle.

Deeper Dive: News & Info About This Topic

• Insurance Business Magazine: Georgia Approves New Restrictions on Third-Party Litigation Funding
• National Law Review: Georgia Regulates Third-Party Litigation Financing
• U.S. Chamber of Commerce: Georgia Tort Reform Legislation
• Wikipedia: Litigation Funding
• Google Search: Third Party Litigation Funding