TORT REFORM
Georgia Senate Passes Third-Party Litigation Funding Bill
ATLANTA //BestWire// - The Georgia Senate passed a bill that places new prohibitions on third-party litigation funders, including requiring them to registering with the state, stiffer disclosure rules and increased penalties for violating the laws.
Senate Bill 69 requires third-party funders to register and be authorized by the state’s Department of Banking and Finance. Any business affiliated with a foreign entity would be barred from registering and entities must disclose ownership information for parties holding 5% or more of voting shares.
Funders would also be barred from directing litigation decisions or strategies, paying commissions or referral fees to attorneys and reporting consumers to credit agencies if funds run out before repayment is completed. Third-party financiers would also be prohibited from profiting more than the plaintiff recovered after legal fees and costs.
Additionally, these agreements would become discoverable during legal proceedings. However, the agreements would not automatically be admissible as evidence based solely on discovery but could be introduced if it supports either side’s claim or defense, the bill says.
Sen. John Kennedy, a Republican representing District 18 who helped introduced the legislation, said the TPLF bill will place safeguards on an industry that continues to grow every year. In 2023, the U.S. commercial litigation industry had an estimated $15.2 billion in assets under its control, Kennedy said.
He added there were no consumer protections in place covering these agreements, which led to exploitation of “everyday” Georgia citizens. Backing this up is data from the Insurance Information Institute, which found residents pay $1,415 annually in a “tort tax.”
“Our civil justice system should not be treated as a lottery where litigation financiers can bet on the outcome of a case to get a piece of a plaintiff’s award,” Kennedy said in a statement.
The bill is part of Georgia’s wider efforts at tort reform, something that Gov. Brian Kemp has pinpointed as a major priority for this legislative session.
“Thanks to the Georgia Senate’s unanimous passage of SB 69, the second half of our tort reform package is now on its way to the House,” Kemp said in a statement. “Thank you to all those listening to hardworking businesses and job creators who are telling us we need tort reform, and we need it now.”
The first portion of the state’s tort reform legislation was passed by the Senate on Feb. 21 (BestWire, Feb. 21, 2025).
Insurance trade groups have been cheering on Georgia’s tort reform movement. The National Association of Mutual Insurance Companies said that higher legal costs insurers face from legal system abuses are ultimately passed on to policyholders (BestWire, Feb. 25, 2025).
“NAMIC has long argued that transparency is vital to ensuring fairness and good faith in the litigation process and preventing third parties from using the judicial system as an investment scheme,” Caitlin Murray, NAMIC regional vice president for the southeast, said in an emailed statement.
(By Steve Hallo, senior associate editor, BestWire: Steve.Hallo@ambest.com)