WASHINGTON — A new Montana law that establishes consumer protections and disclosures in third-party litigation financing is getting applause from some in the trucking industry.
The legislation, SB 269, requires lawsuit lenders to register in the state and makes judges, juries and defendants aware when a third party is financing the litigation.
“The civil justice system is not a stock market, but that is what it’s becoming with the rise of third-party litigation financing,” said ATA President and CEO Chris Spear. “This common-sense measure will bring lawsuit lenders out from the shadows and make the fact finders aware that a disinterested third party has a financial stake in any verdict. We expect other states will soon follow Montana’s lead in ensuring full transparency behind this perverse and shady practice.”
Third-party litigation financing is an arrangement where a funder who is not a party to the lawsuit agrees to help fund it. Funders are typically private firms operating large investment portfolios who expect to get a payout if the suit is successful. The practice disincentivizes reasonable settlements and puts pressure on plaintiffs to seek outsized verdicts in order for lenders to receive a return on their investment.
“When third-party financiers profit from the justice system, it drives up the cost of litigation for everyone and reduces the efficiency of the process. This law will help prevent predatory lawsuits that hinder our industry’s ability to serve our state and economy safely and efficiently,” said Duane Williams, executive director of the Montana Trucking Association. “The Montana trucking industry would like to thank the Montana Chamber of Commerce, Senator Greg Hertz, and Governor Gianforte for their support in increasing transparency in civil litigation.”
Montana’s reforms follow other comprehensive lawsuit abuse reforms recently enacted in Florida and Iowa.
The Trucker News Staff produces engaging content for not only TheTrucker.com, but also The Trucker Newspaper, which has been serving the trucking industry for more than 30 years. With a focus on drivers, the Trucker News Staff aims to provide relevant, objective content pertaining to the trucking segment of the transportation industry. The Trucker News Staff is based in Little Rock, Arkansas.