politics
North Carolina hit third-party litigation funding. Now it must tackle junk science
North Carolina has become the first state to outright ban third-party litigation (TPLF) investment, with HB 315 passing the legislature nearly unanimously. While more durable reforms would have insisted on disclosure and equal tax treatment of TPLF earnings, North Carolina’s ban sends a message to the trial bar — the civil justice system shouldn’t be treated as an investment vehicle free of accountability. More reforms are needed to ensure a fair and effective civil justice system.
TL;DR
- North Carolina enacted HB 315, banning third-party litigation funding (TPLF).
- TPLF allows investors to bankroll lawsuits for a portion of the payout, potentially prioritizing profit over justice.
- This system can encourage lawyers to use flawed or speculative science to support claims.
- Lack of disclosure and preferential tax treatment exacerbate the issue.
- The Taxpayers Protection Alliance (TPA) has advocated for ending TPLF tax loopholes and mandating disclosures.
- Reforming TPLF alone is insufficient; the paid expert witness ecosystem also needs attention.