Washington State Legislature — A Bill to Regulate Third-Party Litigation Financing

The Washington Legislature is going to take a serious look at regulating third-party financing in litigation. House Bill 2255 begins with the establishment of requirements for disclosure via registration with the state. Registration comes with a fee.

The bill will also limit the influence third-party “investors” can have over legal strategy and — ultimately — settlements.

HB 2255 corrects recent changes in state law that relaxed the rules lawyers and law firms can use to solicit. That has increased the number of lawsuits and — ultimately — driven up claims costs. 

Sponsor Rep. Amy Walen is concerned about nuclear verdicts in the millions, and sometimes billions, and that these huge settlements are pushing insurance rates upward.

Third-party contracts will also be required to clearly spell out the repayment amount, the annual percentage rate that will be capped at 12% and a payment schedule will be required. A consumer deciding to use a third-party firm will have five business days to cancel a signed agreement without penalty.

All third-party financiers will be prohibited from paying attorneys and law firms referral fees. And full disclosure of all funding agreements will be shared with all parties in a lawsuit. Failure to follow the rules will be a violation of the state’s consumer protection laws and violators will be prosecuted.

Trial lawyers — as expected — don’t want such a bill passed. The lawyers contend it will limit access to justice.

Source link: Insurance Business America — https://bit.ly/3Zgb8g4