States move to expose lawsuit backers hitting truckers

Small-business owners aren’t just running a company. They’re one brutal lawsuit away from closing for good.

The sky-high cost of fighting a lawsuit pushes many small-business owners to settle fast. Plaintiffs’ lawyers know it.

Now, lawmakers across the country are taking a hard look at who’s really bankrolling these cases. They are also looking at the costs to businesses, including trucking operations.

The Owner-Operator Independent Drivers Association says truck drivers are getting slammed with costly, often unnecessary personal injury lawsuits. The companies that hire, represent or insure them are in the same boat.

These cases don’t just hurt one company. They ripple through the entire supply chain.

OOIDA says some of these lawsuits are powered by outside investors chasing a payday. That can drive up costs and drag cases out even longer. At a minimum, the Association wants plaintiffs to come clean when a lawsuit is backed by outside funding.

Litigation funding happens when outside investors pay for a lawsuit they believe will succeed. In return, they take a cut of the settlement or award.

That setup can make fair settlements 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-related disputes.

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

Utah

Among the growing list of states to act is Utah. A new law there focuses on a key piece of third-party litigation financing.

New consumer protections require lawsuit funders to register with the state. A fee is included.

Another change gives consumers more time to back out. The change extends rescission rights from five days to 10.

The new rules also target commercial maintenance funding providers.

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

And there’s a hard line on foreign ties. Providers cannot enter into agreements with foreign entities of concern.

Foreign money in lawsuits is raising red flags for businesses.

Advocates warn that more “bad-faith foreign actors” are willing to use the U.S. courts against American businesses.

Mississippi

Mississippi Gov. Tate Reeves signed a new law aimed at shining a light on who’s funding litigation. The focus is on identifying foreign players.

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

The law takes effect July 1.

Missouri

Missouri lawmakers are going even harder – especially when it comes to foreign cash.

A bill close to the finish line would block foreign players – and their middlemen – from funding litigation in the state.

HB3205 would also force funders to share legal responsibility for costs or penalties tied to the cases they bankroll.

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

Any deal that violates 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 courts focus on fair outcomes – not turning lawsuits into profit machines or tools for foreign influence.

Ohio

Ohio lawmakers are also moving to pull back the curtain on litigation funding.

Right now, state law doesn’t require anyone to disclose these funding deals during a lawsuit.

That could change.

A House-approved bill would require those agreements to be disclosed.

Rep. Meredith Craig, R-Smithville, said HB105 would bring clarity to people who are stuck in tough financial situations amid legal fights.

The bill would also ban foreign governments, corporations and investors from taking part in litigation funding deals.

Craig said the business of nonrecourse litigation funding has operated without guidelines for too long.

“House Bill 105 protects our judicial system from outside influence, guards against interference and will ensure that justice in Ohio is never for sale to foreign actors,” Craig said.

The bill now heads to the Senate Judiciary Committee. LL