Louisiana Gov. Gets Bill to Regulate Lawsuit Funding Business

A Louisiana bill to regulate the litigation finance industry is headed to Gov. Jeff Landry’s desk for signature after clearing the state’s legislature.

The measure (SB 355) was passed unanimously by the state Senate on Friday. It would bar outside funders from controlling cases in which they invest. The bill also would require parties in lawsuits to disclose funding from “countries of concern” to the state attorney general.

Landry, a Republican, has not publicly said whether he intends to sign the bill. His predecessor, Democrat John Bel Edwards, last year vetoed more expansive legislation that would have generally required third-party funding disclosures in civil cases.

The new bill is part of a push in several states to force disclosure of litigation funding arrangements, in which investors pay for the cost of lawsuits in return for a piece of the proceeds in successful cases. The US Chamber of Commerce has led the charge, arguing that the $15.2 billion litigation finance industry encourages frivolous suits.

The Louisiana bill would generally ban funders from directing lawyers and parties on how to pursue suits, including whether to settle, a concern often voiced by detractors of the industry. It would also make litigation financing contracts subject to discovery in civil cases.

The measure would require lawyers to disclose the names of certain foreign entities from countries of concern financing suits in Louisiana—and provide a copy of the funding agreements—to the state’s attorney general. That includes entities in Russia, China, and Iran.

The bill is similar to legislation introduced at the federal level last year by Sen. John Kennedy (R-La.) and House Speaker Mike Johnson (R-La.). The federal legislation has not moved and is considered a long shot in a deeply divided Congress.