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Georgia Regulates Third-Party Litigation Financing

An abstract representation of the new regulations on third-party litigation financing in Georgia.

News Summary

The Georgia House has passed Senate Bill 69, which regulates third-party litigation financing to enhance transparency and protect plaintiffs. Supported by Governor Kemp, the bill facilitates registration of financiers and ensures they do not interfere in lawsuits. Critics argue it may not alleviate financial burdens for all plaintiffs. This regulatory trend reflects a national focus on fair litigation financing, mirroring similar laws across the U.S.

Georgia Takes a Big Step to Regulate Legal Funding

In an important move for transparency and fairness in the legal system, the Georgia House of Representatives has given the green light to Senate Bill 69, aimed at regulating third-party litigation financing. The bill has drawn support from Governor Brian Kemp, who is pushing it as part of his larger tort reform initiative. After a spirited debate, the bill passed with a final vote tally of 98-69, following adjustments inspired by lawmakers’ concerns.

Understanding Third-Party Litigation Financing

So, what does this new bill really mean for Georgians? Well, third-party litigation financing essentially involves outside entities providing money to individuals involved in lawsuits, often in exchange for a share of any potential winnings. While this can be a lifeline for those who need the cash to pursue their cases, the system has come under scrutiny for its potential to lead to what some call “unregulated gambling” in court.

Key Features of the New Legislation

Senate Bill 69 introduces several important rules to help protect plaintiffs who may currently find themselves navigating a murky sea of funding without much support. Firstly, this legislation mandates that third-party financiers must register with the Georgia Department of Banking and Finance. This should provide a clearer picture of who is funding lawsuits and how those funds are being used.

Additionally, the bill takes steps to ensure that financiers cannot dictate how a lawsuit is conducted, so plaintiffs retain greater control over their case. This is a big deal for those who might fear that their financial backers would meddle in their legal strategies.

Emphasizing Transparency and Accountability

Another critical aspect of this legislation is its focus on transparency. The new rules require funders to disclose their financial interests in an ongoing case to juries and judges, which could pave the way for fairer deliberations. Here’s a notable provision: if a funder contributes over $25,000 to a plaintiff, they may also be held liable for legal expenses if the case turns out to be frivolous. This means those financial players need to think twice before getting involved in questionable cases.

The new regulations also introduce a ban on financing from entities tied to countries designated as foreign adversaries by the federal government, a move that has gained support from various sectors, including health care providers, small businesses, and the Georgia Chamber of Commerce. They consider it a way to protect the integrity of the court system from potential exploitation by foreign actors.

Mixed Reactions from Lawmakers

While many are singing the praises of this new legislative effort, not everyone is on board. Critics, particularly some Democratic lawmakers and trial lawyers, argue that the bill may not genuinely ease the financial burdens on everyday consumers. Concerns have been raised about the fairness of the requirements imposed on funders, with some suggesting that it could complicate matters for family members who lend money to support litigation.

A Broader Trend in the U.S.

Interestingly, Georgia is not alone in this endeavor. Across the United States, similar regulations have been enacted as part of an emerging focus on ensuring that litigation financing is fair and transparent. Georgia’s Senate Bill 68, which aims to limit excessive civil lawsuits and jury awards, has already passed earlier in the session, complementing SB 69 in a concerted effort to reform the legal landscape.

As Georgians look to the future, it remains to be seen how these regulations will play out in practice. The balance between fair access to justice and protecting the legal system from potential abuses is a tricky line to walk. One thing is clear: the conversation around litigation financing is just getting started, and residents will likely be keeping a close eye on how these new laws affect their legal rights and financial well-being.