Georgia Limits Outside Funders’ Control of Suits in New Law (1)

Georgia Governor Brian Kemp (R) signed a bill regulating the litigation funding industry into law on Monday.

The new law allows funding agreements to be discoverable in court and bans funders from directing the cases they bankroll, including having a say in legal counsel selections and settlement decisions. It requires funders to register with the state and prohibits foreign governments and entities designated by the US Commerce Department as foreign adversaries from backing cases in the state’s courts.

“Today is a victory for the people of our state who for too long were suffering the impacts of an out-of-balance legal environment,” Kemp said in a press release.

The bill is part of Kemp’s broader tort reform package, which was also signed into law Monday. New laws eliminate a loophole that supporters said allowed attorneys to receive double their fees and permits defense counsel to submit evidence about insurance coverage for medical bills in personal injury cases. Kemp, along with Lieutenant Governor Burt Jones, House Speaker Jon Burns, and Insurance and Safety Fire Commissioner John King presented the package as a way to level the playing field in courtrooms and stabilize insurance costs for businesses and consumers.

“After months of listening to our citizens, businesses, and stakeholders across the spectrum, it is clear the status quo is unacceptable, unsustainable, and jeopardizes our state’s prosperity in the years to come,” said Kemp in January press release. “This tort reform package protects the rights of all Georgians to have access to our civil justice system, and ensures that those who have been wronged receive justice and are made whole.”

Litigation finance is the subject of a handful of state bills this year including in Ohio, New Hampshire, and Arizona.

A bill in Kansas signed into law in April and was touted as a compromise between the International Legal Finance Association, the $15.2 billion funding industry’s advocacy arm and the Kansas and US Chamber of Commerce, a vocal critic of outside funding in lawsuits. It requires disclosure of funding from foreign countries of concern as well as disclosure of funding agreements in private.

“ILFA was disappointed that the Georgia legislature was unable to find a solution to its concerns with legal funding that did not shut off critical access to the state’s courts systems,” said Paul Kong, ILFA’s executive director, in a statement. “Other states, recently and notably Kansas, were able to address these concerns without unintended consequences. We hope others will follow that model.“

Protecting American Consumers Together (PACT), a newly formed advocacy organization pushing for bills directed at the personal injury system, backed Georgia’s tort reform package. PACT launched in January with backing from Uber and committed more than $10 million towards advertisements focused on consumer protection and transparency in the legal system.

“PACT applauds Governor Kemp and the Georgia legislature for their hard work to protect consumers, lower costs and increase transparency,” said PACT Executive Director Lauren Zelt. “This law makes the Peach State more affordable for families and small businesses while reforming a broken system that ensures consumers and victims can seek the justice they deserve.”