NEW YORK – RIMS, the risk management society®, commends the North Carolina legislature for their prudent decision to prohibit third-party litigation funding (TPLF) in the State. Specifically, the legislation makes it “unlawful for a person to engage in litigation investment in this State or to furnish litigation investment to a party or counsel of record in a civil proceeding in this state.” A funder can incur civil penalties of up to $50,000 per violation. The law includes exceptions such as pro bono funding, insurers’ defense or indemnification obligations, or loans or financial support not contingent on a proceeding’s outcomes.
TPLF remains one of RIMS legislative priorities. The Society will continue to dedicate resources that support advocacy initiatives that raise awareness about TPLF’s devastating impacts on the economy, the security of intellectual property from both domestic and foreign competitors, and organizations’ ability to financially address legal risks while delivering affordable goods and services.
“Third-Party Litigation Funding distorts the purpose of our legal system,” said RIMS President Manny Padilla. “It allows outside investors to profit from lawsuits at the expense of plaintiffs and businesses alike, driving up costs and creating unnecessary financial strain. North Carolina lawmakers have taken an important step toward addressing these concerns, and RIMS looks forward to building on this momentum as we continue to advance this legislative priority. Through the leadership of the RIMS Public Policy Committee and its Legislative Summit activities, the Society has long supported efforts to increase transparency and accountability in Third-Party Litigation Funding arrangements nationwide. We commend North Carolina’s leadership for having the foresight to restore balance and transparency in the State’s justice system.”