Governor DeWine Signs Third Party Litigation Funding Reform into Law

Restores Transparency and Integrity to Ohio Courts

In Ohio, and across the nation, private equity firms are turning litigation into an investment strategy.  Outside investors can secretly fund lawsuits in exchange for a cut of the proceeds.  Increasingly, these investors are pursing direct ownership in the law firms, blurring the line between our judicial system and a Wall Street investment strategy.

This model creates a troubling incentive structure—it pays not only to file more lawsuits, but to drag out the length of litigation too, because at the end of the day the larger the payout, the greater the return for investors. What was a system designed to resolve disputes and protect consumers and businesses alike is being exploited for monetary gain—at the expense of Ohio business owners. 

Ohio ranks 15^th in the nation for worst in the country for lawsuit abuse, a ranking that is exacerbated by this practice.  That’s where the importance of Sub. HB 15 comes into play. While it does not ban the practice, it does bring it to the open. New regulations include:

1. Litigation funders must register with the Ohio Attorney General

2. Funding agreements must be disclosed after a case is resolved

3. Foreign entities are prohibited from financing Ohio lawsuits

   
   

As Nick Rhodes, Director of Policy and Special Projects said, “This legislation is a major step forward in protecting both Ohio consumers and the integrity of our civil justice system, while ensuring our state remains an attractive place for businesses to grow and invest.”

Transparency, accountability, and public confidence are essential to the effective functioning of Ohio’s civil justice system. By establishing clear rules and protections, Sub. HB 105 helps ensure that justice, not undisclosed funding agreements, remain at the center of Ohio’s courts.