Christine Jordan Sexton
While it may have slowed down in the House, a Senate panel this week approved an insurance industry-backed bill that cracks down on the $13.5 billion third-party litigation financing industry.
Orlando Democrat Sen. Linda Stewart joined with the Republicans on the committee in a 15-5 vote to approve SB 1276.
The bill would create a new section of law called the Litigation Investment Safeguards and Transparency Act and requires lawyers who enter into third-party litigation agreements to disclose that information to their clients. They would also need to inform 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.
The reporting requirements apply to arrangements funded by domestic and international third-party financing companies.
The committee tagged an amendment onto the bill to make clear that the information being disclosed does not include the dollar amounts being financed and provisions regarding attorney fees and costs before making such disclosure.
Proponents of the bill say the it would protect litigants because it also prevents litigation financiers from directing the course of legal proceedings and contracting for a larger share of the proceeds from a legal proceeding than collectively recovered by the plaintiffs.
Proponents such as the Florida Justice Reform Institute also claim that internationally funded litigation financing could pose a risk to U.S. national and economic security interests and the bill helps prevent that. The bill staff analysis cites a Jan. 6 letter from U.S. Sen. John Kennedy to U.S. Attorney General Merrick B. Garland and U.S. Supreme Court Chief Justice Roberts.
But Committee on Fiscal Policy member Sen. Shevrin Jones said he didn’t “buy” the argument.
“I don’t buy the national security concern that we’re speaking of, war, or any form of manipulation. And I also don’t buy the fact that this protects litigants at this time,” Jones said. “It doesn’t sit well with me at this time. But maybe after I spend some time talking with the bill sponsor, I’ll probably be in a different place. “
Bill sponsor Sen. Jay Collins defended his proposal,” which has attracted scores of lobbyists.
“I do want to thank everybody who came today and shared their thoughts, their views. There have been a lot of people at the table working together to make sure this product is as good as it can be for the state of Florida. Ultimately, what we’re trying to do is give control back to Floridians,” he said.
The Fiscal Policy Committee’s overwhelming approval comes two days after the House Justice Appropriations Subcommittee was forced to defer a vote on the bill. It was the second time in as many weeks that the panel delayed voting on the bill due to lack of support.
The bills are a top priority for the Florida Justice Reform Institute and the American Tort Reform Foundation, which repeatedly referenced third-party litigation financing in its 2023-24 Judicial Hellhole Report.
This year’s legislation is coming forward following a public fight between food giant Sysco and Burford Capital, the largest third-party finance and management firm. It is publicly traded on the New York, and London stock exchanges with offices in New York, London, Chicago, Washington, Singapore, Dubai, Sydney and Hong Kong.
Facing price-fixing suits, Sysco initially turned to the financier for assistance. But it ultimately sued Buford Capital accusing the financier of meddling with its legal strategy and blocking a settlement that Burford deemed “too low.”
Another high-profile case involving third-party financiers is Bollea v. Gawker Media. Plaintiff Terry Bollea (known professionally as Hulk Hogan) sued Gawker Media for publishing on its website a video of Bollea engaging in sexual relations with a married woman.
Billionaire and PayPal co-founder Peter Thiel secretly funded Bollea’s lawsuit. Gawker, in 2007, published a piece outing Thiel as gay, but Thiel denied that impacted his choice to fund the suit.
The jury ultimately found Gawker liable and awarded Bollea $115 million in compensatory damages and $25 million in punitive damages. A few months later, Gawker filed for Chapter 11 bankruptcy and sold several of its media outlets before settling with Bollea for $31 million.
