Arguing that the practice could increase meritless lawsuits and give foreign investors access to proprietary information or information affecting national interests, the Florida Justice Reform Institute is asking the Legislature to pass a law that requires lawyer to disclose whether a third party is helping to finance litigation.
Members of the House Civil Justice Subcommittee passed legislation (HB 1179) filed by Reps. Tommy Gregory and Toby Overdorf by a 10-7 vote. The Senate Judiciary Committee voted unanimously to pass identical legislation (SB 1276) last week.
The bill creates a new statute called the Litigation Investment Safeguards and Transparency Act and establishes definitions for, among other things, litigation financing, foreign persons and foreign principles.
It requires lawyers who enter third-party litigation agreements to disclose that information to their clients as well as the court, opposing counsel and any known person, such as an insurer, with a preexisting contractual obligation to indemnify or defend a party to the action.
If the litigation financing company has international ties, lawyers also must disclose the name, address and citizenship, country of incorporation or registration of any foreign person, foreign principal or sovereign wealth fund.
Overdorf said the requirement protects American interests from foreign interests.
While the legislation isn't specifically targeted at plaintiffs' attorneys, some members of the House Civil Justice Subcommittee said the definition of litigation financing would not apply to the insurance companies that defend the claims.
That's because the definition exempts health insurance companies and "an entity with a preexisting contractual obligation to indemnify or defend a party to a civil action, administrative proceeding, claim, or other legal proceeding."
But some committee members said the proposal was one-sided and would impede people's access to courts.
Rep. Ashley Gantt, a member of the committee and a lawyer, said the bill "is leaving Floridians who will have a cause of action against the big company at a great disadvantage. And the insurance companies again, will not have a duty to disclose. So we're telling the lion, he has a slingshot, and he actually has three pebbles, so make sure you dodge those three pebbles and then you will be good. So we're robbing David of having the ability to defend himself in a situation of litigation."
In addition to being a top priority for the Florida Justice Reform Institute, the bills also are a priority for the American Tort Reform Foundation. A section of the 2023-24 Judicial Hellhole Report the American Tort Reform Foundation publishes was dedicated to third-party litigation agreements.
The proposed changes in the bills have been under consideration in the Legislature before, but they haven't made it across the finish line. Litigation financing was left out of last year's omnibus tort bill (HB 837), and in previous years, the bills have died in committee
The proposal's prognosis for the 2024 Session, supporters say, is good. SB 1276 is slated to be heard by the Senate Fiscal Policy Committee next. It is the second and last stop for the bill before it's eligible to be heard on the Senate floor. HB 1179 is next slated to be heard by the House Justice Appropriations Subcommittee and the Judiciary Committee, which is chaired by bill co-sponsor Gregory.
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