Who’s really paying for lawsuits against truckers?

One lawsuit can do more than drain a small business. It can put years of hard work on the line.

For many trucking companies, fighting a lawsuit costs so much that settling can seem like the only way to survive. Trial lawyers know that pressure can force businesses into a corner.

Now, lawmakers across the country are pulling back the curtain on who’s really paying for these lawsuits. They’re also looking at the damage they can do to trucking companies and other small businesses.

The Owner-Operator Independent Drivers Association says truck drivers, motor carriers, and their insurers are getting slammed by costly lawsuits that often drag on for years.

The damage doesn’t stop there. Higher legal costs can ripple through the entire supply chain.

OOIDA says some of those lawsuits are bankrolled by outside investors hoping for a big payday. That can drive up costs, stretch cases out even longer, and leave everyone paying the price.

At the very least, OOIDA wants plaintiffs to disclose when outside money is helping fund a lawsuit.

Third-party litigation funding allows investors with no stake in a case to pay for a lawsuit in exchange for a share of any future settlement or court award.

Supporters say it helps plaintiffs cover legal costs. Critics argue that the deals happen behind closed doors, drag out cases, and often leave plaintiffs with only a small share while investors collect large payouts.

Some lawsuits have even been backed by foreign investors, raising concerns about outside influence in U.S. courts.

Those investments cover many types of cases, including truck crash lawsuits and other trucking-related claims.

More states are now moving to rein in third-party litigation funding. Ohio is the latest state to act. More could soon follow.

Ohio

Ohio is shining a light on who’s really paying for lawsuits.

Until now, state law didn’t require anyone to disclose third-party litigation funding during a case.

Tom Balzer of the Ohio Trucking Association told lawmakers the lack of transparency has gone on long enough.

“By allowing outside entities to fund lawsuits in exchange for a share of settlements or verdicts, third-party litigation funding incentivizes frivolous claims, prolongs litigation, and inflates damages, all of which increases costs for trucking companies,” Balzer said.

Gov. Mike DeWine signed a new law requiring litigation funding agreements to be disclosed.

Rep. Meredith Craig, R-Smithville, said the new measure finally brings transparency to an industry that has operated in the shadows.

The law also includes a first-in-the-nation ban on all foreign governments, corporations and investors participating in litigation funding deals.

“For too long, foreign actors have profited off Ohio citizens and businesses by investing in our courts,” Craig said. “That stops today.”

North Carolina

North Carolina has gone even further.

A new law bans third-party litigation funding altogether.

Outside investors can no longer pay the costs of a lawsuit in exchange for a share of the outcome.

The ban applies to lawsuits, arbitration, mediation and administrative proceedings.

Supporters say the law targets investment-driven lawsuits. They add that it also protects traditional ways people pay for legal representation.

Any agreement that violates the law is void.

Violators can face fines of up to $50,000 for each violation.

People harmed by illegal agreements can also recover damages, attorney fees and up to three times the amount of the proposed investment.

The law is now in effect.

New Hampshire

New Hampshire is also shutting the door on foreign money in state lawsuits.

Gov. Kelly Ayotte signed HB1384 into law last week.

The new law bars foreign governments and other foreign entities from financing civil lawsuits in the state.

It also bans litigation funding, directly or indirectly, backed by countries designated as foreign adversaries under federal regulations or by sanctioned foreign organizations.

Sen. Bill Gannon, R-Sandown, said the law is designed to stop countries such as China from investing in lawsuits filed in New Hampshire.

He said the measure also creates clear rules for third-party litigation funding.

Michigan

Michigan lawmakers are also trying to pull lawsuit funding out of the shadows.

Rep. Mike Harris, R-Waterford, said the state has no guardrails for what he calls “shadow cash” flowing through the court system.

He warned that third-party litigation funding is becoming a growing threat to Michigan’s legal system.

“My legislation addresses the worst part of this industry: the fact that outside investors can pour money into lawsuits without telling a soul,” Harris said.

The Michigan House approved a bill requiring litigation funding agreements to be disclosed. Funders would also have to register with the state.

The bill would ban funders from paying commissions, referral fees, kickbacks or other incentives. The rule would apply to attorneys, healthcare providers and medical professionals.

It would also prohibit foreign governments, foreign nationals and other foreign entities of concern from financing lawsuits.

Harris said stronger oversight is needed to prevent foreign actors from influencing the courts, hurting businesses or gaining access to sensitive information.

HB5281 is in the Senate Regulatory Affairs Committee. LL