Third-party litigation funding (TPLF) has become a significant issue of concern in the claims industry. Meanwhile, states across the country have responded with bills and regulations primarily aimed at bringing transparency to TPLF, with varying degrees of success. CLM recently spoke with Mark Friedlander, senior director, media relations for Triple-I; and Rhonda Hurwitz, assistant vice president, liability and counsel, American Property Casualty Insurance Association (APCIA) to gather thoughts on the latest in TPLF legislation and regulation efforts around the country.
Q: What are some examples of states that have recently enacted legislation regulating TPLF? Are there any particular states where the regulatory approach appears to be working better than others?
Rhonda Hurwitz, APCIA: Several states have taken steps to regulate TPLF with consumers in mind—particularly by shining a light on who is driving lawsuits and ensuring plaintiffs and the courts understand when outside investors have a financial stake.
Ten states currently require disclosure or discovery of litigation finance. These reforms are designed to restore transparency and prevent hidden financial interests from prolonging lawsuits and driving up costs that ultimately land on consumers through higher insurance premiums and everyday prices.
While many of these laws are still relatively new, states that pair transparency with limits on funder control appear to be taking the strongest consumer-focused approach. The goal is simple: Lawsuits should be about resolving legitimate disputes between the parties—not maximizing returns for outside third-party investors at the expense of families and small businesses.
Mark Friedlander, Triple-I: States that have enacted TPLF reform include Arizona, Colorado, Georgia, Indiana, Kansas, Louisiana, Montana, Oklahoma, Tennessee, West Virginia and Wisconsin. In 2025, lawmakers in five states passed TPLF legislation: Colorado, Georgia, Kansas, Montana and Oklahoma.
See Also: CLM’s coverage of the Consumer Litigation Funding Act in New York, which is scheduled to take effect in June.
Q: What new or pending legislative developments are emerging at the state level regarding TPLF?
Friedlander: State legislative efforts on TPLF bills are centered around the following reforms: mandatory disclosure of funding agreements, consumer protection, and restricting foreign influence/national security protections.
Hurwitz: More than 20 states have considered or proposed TPLF legislation over the past two years, with bills focusing on disclosure requirements, registration of funders, and restrictions on foreign or investor control over lawsuits. States such as Idaho, Iowa, Massachusetts, Rhode Island, Ohio, Nebraska, and Oklahoma have multiple bills under consideration addressing disclosure, registration of funders, and limits on funder control and influence.
This activity mirrors a broader realization among policymakers: unchecked litigation practices don’t just affect courtrooms—they affect household budgets, from higher auto and homeowners’ insurance premiums to increased costs for goods and services.
Q: What are some key issues lawmakers tend to focus on when considering TPLF legislation?
Hurwitz: When lawmakers look at TPLF, three consumer-focused concerns consistently rise to the top:
- Transparency: Consumers deserve to know when lawsuits are being financed by third-party investors who stand to profit from longer, more expensive litigation. Disclosure helps courts and parties see the full picture.
- Control and fairness: Lawmakers are wary of funders steering litigation decisions or settlements in ways that prioritize investor returns over the interests of plaintiffs—or the broader public.
- Cost impacts: Recent analysis by The Perryman Group finds that third-party litigation funding imposes billions of dollars in costs on the U.S. economy, pushing prices higher for both households and businesses. The study estimates nearly $200 per person and more than $600 per average household per year in losses driven by lower earnings and higher prices. These costs ripple across everyday expenses—including auto and homeowners insurance—making it clear that third-party litigation funding is a growing affordability problem for families and businesses nationwide. At its core, the debate is about protecting consumers from a system that quietly transfers wealth from families to litigation financiers.
Friedlander: Key issues driven by pro-tort reform lawmakers include mandatory disclosure of funding agreements, consumer protection, and restricting foreign influence.
Q: Looking ahead, are there any particular states or overall trends that insurers should be keeping an eye on?
Friedlander: Recent polling conducted by Impact Research highlighted how New York voters support lawsuit reforms that would lower insurance premiums. An effort to pass tort reform legislation this year to reduce personal auto insurance costs in the Empire State is being spearheaded by New York Gov. Kathy Hochul.
Poll results included:
- 69% of registered voters in competitive New York districts said their auto insurance premiums rose in the past year.
- 76% believe lawsuit abuse is driving up the cost of goods and services.
- 74% support legislation to reform how civil courts handle auto accident cases.
- 84% said it’s important for lawmakers to stop lawsuit abuse following auto accidents.
- 38,000 suspected auto insurance fraud incidents were reported in 2023, adding $300 to annual premiums for all New York drivers.
Additionally, Georgia, Kansas, Tennessee, and Oklahoma lawmakers have introduced public nuisance/locality bills during their respective 2026 legislative sessions.
Hurwitz: Two key trends stand out.
First, states are increasingly treating transparency as the floor, not the ceiling, when it comes to reform. Even when lawmakers stop short of full regulation, disclosure requirements are becoming the baseline expectation.
Second—and critically for consumers—Florida provides a powerful example of what effective legal reforms can achieve. While Florida’s recent reforms were broader tort reforms rather than TPLF specific, the results have been clear: stabilization in insurance markets, increased availability of coverage, and early signs of relief from relentless cost pressures on families and homeowners.
Florida’s experience underscores an important lesson for other states: when lawmakers rein in legal system abuse and restore balance, consumers benefit.
APCIA encourages legislators across the country to build on Florida’s example and enact reforms that deliver real savings for consumers and strengthen local economies.