Florida Legislative Changes on Third-Party Litigation Funding
As the Florida legislative session of 2026 begins, property and casualty insurance executives expect few legislative changes due to the 2022 reforms addressing excessive litigation costs. However, a new bill focusing on controlling litigation-related expenses is gaining attention. This attention is driven by increasing concerns about third-party investments in lawsuits that extend durations and encourage unnecessary class actions.
Regulating Third-Party Litigation Funding
House Bill 1157, introduced by Representative Fabian Basabe from Miami Beach, alongside Senate Bill 1396 sponsored by Senator Colleen Burton, targets the influence of third-party litigation financiers. Supported by the U.S. Chamber of Commerce, these bills aim to regulate the control these financiers exert over legal proceedings. The U.S. Chamber's Institute for Legal Reform notes, “These bills aim to close a loophole that permits foreign entities to finance litigation with the potential to disrupt Florida’s legal system and economy.”
The proposed regulations would prohibit financiers from directing legal action, such as choosing legal representatives, determining strategy, or selecting expert witnesses. Additionally, the bills would prevent financiers from receiving a more considerable share of settlements than plaintiffs. If enacted, these laws would take effect on July 1, 2026.
Implications for Regulatory Compliance and Risk Management
Despite expected passage through the Florida Senate, the House presents a greater challenge due to differing views on tort reform. George Feijoo, a consultant with ties to the U.S. Chamber, explains that if approved, Florida would join at least eight other states—Georgia, Kansas, Louisiana, Indiana, Montana, Oklahoma, Wisconsin, West Virginia, and potentially New York—that have implemented legal boundaries on third-party litigation funding. Washington State is reviewing similar legislation, and Alabama considers discussions possibly leading to proposed measures soon.
The comprehensive text of Florida’s HB 1157 offers further details on the proposed legal framework affecting the insurance industry.