By Lewis Nibbelin, Research Writer, Triple-I
Momentum against third-party litigation funding (TPLF) has been building in recent years as more state lawmakers move to limit the practice or improve disclosure around it. A new Triple-I Issues Brief takes stock of the current legislative landscape and explains why states are acting.
As of mid-2026, more than 20 states have enacted laws regulating TPLF. Notably signed into law this year includes North Carolina’s landmark HB 315, which bans litigation investment outright and authorizes civil penalties of up to $50,000 per violation. Ohio (HB 105), Mississippi (SB 2747), Tennessee (HB 2108), and Utah (HB 280) also implemented laws this year to introduce disclosure requirements, foreign-entity funding restrictions, and other limitations on funder influence over litigation.
TPLF is an arrangement in which an outside investor advances money to a plaintiff or law firm to pursue a lawsuit in exchange for a share of any eventual settlement or verdict. If the case fails, the investor typically loses its stake; if it succeeds, the funder can claim a substantial cut.
In practice, these agreements encourage prolonged and unnecessary cases and can culminate in extreme nuclear verdicts of $10 million or more. In 2025, nuclear verdicts hit a record $25.6 billion across nearly 200 cases, based on Marathon Strategies’ latest data. Swiss Re estimated the global TPLF market at roughly $17 billion, with annual investments projected to reach $31 billion by 2028.
A Triple-I and Casualty Actuarial Society study estimated these legal system trends contributed to between $231.6 billion and $281.2 billion in liability insurance losses over the past decade. These additional costs ultimately affect consumers and businesses through higher insurance premiums.
As policymakers seek ways to rein in rising costs, it’s important to learn from states that are succeeding. Florida has a long history of problems caused by insurance fraud and litigation abuse that kept upward pressure on insurance rates. Recent reforms to check these practices have made the Sunshine State a national model for the kinds of market improvements states can expect through tort legislation.
Learn More:
Attorney Involvement Hurts Plaintiffs Through Slower Settlements, Smaller Net Payouts
Early Signs of Louisiana Insurance Rate Relief Signal More Work Ahead
How AI Helps Insurers Combat Fraud, Legal System Abuse
Florida Reforms Drive Benefits for Consumers
States Take the Lead on Third-Party Litigation Funding Reform
