In 2025, at least six US states enacted or materially amended statutes regulating third-party litigation funding.
Georgia, Kansas, Oklahoma, Colorado, Arizona and Montana each addressed, in different combinations, disclosure, funder registration, foreign funding, funder control and discoverability.1 Indiana and Louisiana belong in the same trend but not in the same cohort: both were 2024 enactments already in force before the 2025 wave had fully developed.2 No two statutes are alike. The result is not a regulatory framework but a patchwork, and the strategic consequences for funders, claimants and defendants are already becoming visible.
Georgia Sets the High-Water Mark
Georgia’s Courts Access and Consumer Protection Act is the most aggressive of the six. It requires litigation financiers to register with the Georgia Department of Banking and Finance through the Nationwide Multistate Licensing System. The registration requirement became effective on 1 January 2026, after the Georgia Department of Banking and Finance had issued NMLS registration directions on 1 October 2025.3 The threshold is USD 25,000. Any funding arrangement at or above that amount triggers disclosure obligations, subjects the funder to potential joint and several liability for court-ordered sanctions and costs, and makes the existence, terms and conditions of the agreement discoverable. Penalties for non-compliance range from misdemeanour to felony, with the most serious violations carrying up to five years’ imprisonment and a fine of USD 10,000.4
The statute treats litigation finance as a regulated financial activity. That is a categorisation with real consequences. It places funders alongside lenders, mortgage brokers and money transmitters in the state’s supervisory architecture. Whether the Georgia model migrates to other states will depend in part on whether the registration requirement proves workable or whether it becomes a barrier to market entry that reduces the available funding pool without a corresponding gain in consumer protection.
The Foreign Funding Axis
Arizona, Colorado, Oklahoma and Montana all used foreign-influence controls, although Arizona’s statute also goes further into general disclosure, control and consumer-protection rules. Arizona’s Litigation Financing Safeguards Act, effective 31 December 2025, prohibits funding from “foreign entities of concern,” defined to include entities affiliated with governments identified as national security threats or those on terrorism and sanctions lists. Colorado’s HB 25-1329, effective since 6 August 2025, requires foreign funders to disclose to the Colorado Attorney General within thirty-five days and renders non-compliant agreements void. Oklahoma’s Foreign Litigation Funding Prevention Act, effective since 1 November 2025, requires parties to disclose by affidavit whether funds originate from a foreign state or entity.
Montana should be included in the 2025 cohort. SB 511, signed on 5 May 2025, amended the state’s existing Litigation Financing Transparency and Consumer Protection Act and created the Foreign Investment in Litigation Financing Act.14 Its significance is that it combines the foreign-funding concern with broader transparency and control restrictions, including limits on funding by certain foreign entities, registration and transparency obligations for foreign persons, and a cap on the funder’s share at 25% of monetary relief. It sits naturally alongside Arizona, Colorado and Oklahoma on the foreign-influence axis while also overlapping with the broader disclosure and market-supervision trend.
The national security framing is not accidental. At federal level, Representative Ben Cline’s Protecting Our Courts from Foreign Manipulation Act was ordered to be reported, as amended, by the House Judiciary Committee 15-11 in November 2025.5 The bill would ban funding from foreign states and sovereign wealth funds in civil litigation where they are not a named party. Representative Darrell Issa’s Litigation Transparency Act, which would impose a broader disclosure requirement for all third-party investment agreements, remains in committee.6 The foreign funding bills have bipartisan traction that general disclosure legislation lacks. The argument is straightforward. Discovery in US civil litigation can expose proprietary commercial information and national security-sensitive material. If a foreign sovereign is bankrolling the claim, the defendant has a right to know.
The Kansas Compromise
Kansas produced something the other five states did not. SB 54 was jointly supported by the International Legal Finance Association and the US Chamber of Commerce.8 It requires disclosure to the court for in camera review, meaning the information is available to the judge but not to the opposing party as a matter of course. The funder’s identity, the nature of its financial interest and any control or approval rights over litigation must be disclosed by sworn statement within thirty days after commencement of the action or execution of the agreement, whichever is later. The statute also requires disclosure of any foreign entity involvement.
The significance of Kansas is procedural, not substantive. It demonstrates that the funding industry and its principal critics can agree on a disclosure model when the terms protect confidential commercial information from becoming a litigation weapon. In camera review keeps the judge informed without handing defendants a tool to challenge every funded claim on disclosure grounds. The Senate passed it 40-0. That unanimity is instructive.
The Insurance and Federal Dimensions
Two developments outside the state legislatures will shape how the patchwork operates. The Insurance Services Office introduced ISO Form CG 99 11 01 26, an optional “Condition—Litigation Funding Mutual Disclosure” endorsement for 2026 commercial liability programmes.9 The endorsement allows either party to a coverage dispute to demand mutual disclosure of all funding arrangements within thirty days. If widely adopted, this converts disclosure from a litigation obligation into an insurance one. Failure to disclose could jeopardise coverage.
The US Judicial Conference’s Advisory Committee on Civil Rules met in October 2025 to discuss whether to propose a federal rule on TPLF disclosure and agreed to continue studying the question.10 These developments sit against a backdrop of escalating liability costs. Swiss Re’s analysis found that US liability claim severity increased by 57% over the past decade, with commercial casualty losses reaching USD 143 billion in 2023.7 That figure exceeds total insured losses from global natural catastrophes in the same year. The insurance industry views litigation funding as a contributing factor. The more accurate reading is that funding responds to the structural under-enforcement of valid claims. Without external capital, many meritorious cases would never reach trial. Regulation that fails to account for this reality risks reducing access to justice in the name of protecting those least in need of protection.
The 2026 Acceleration
The momentum has not stalled. In February 2026, Senators Grassley, Tillis, Kennedy and Cornyn introduced S. 3826, the Litigation Funding Transparency Act, targeting disclosure in federal class actions, MDLs and other large coordinated federal proceedings.11 The bill would prohibit funders from controlling litigation decisions or accessing discovery materials under protective orders. Florida’s Litigation Investment Safeguards and Transparency Act cleared the Senate Judiciary Committee 8-2 in January 2026 but died on calendar on 13 March 2026.12 Had it been signed, it would have barred funders from selecting lawyers or expert witnesses and capped funder recovery below the plaintiff’s share. Pennsylvania’s Supreme Court Civil Procedural Rules Committee also published a proposed amendment to Pa.R.Civ.P. 4003.2 addressing TPLF disclosure. The comment period closed on 22 April 2026.13
The regulatory front is expanding on three axes simultaneously. State legislatures are enacting substantive restrictions. Federal legislators are targeting class actions and MDLs. And the courts themselves, through rulemaking committees, are considering procedural disclosure requirements that would operate independently of legislation. For the litigation finance industry, the question is no longer whether regulation is coming but which of these three channels will set the terms.
The Strategic Question
The American patchwork creates arbitrage. A funder barred from operating without registration in Georgia can deploy capital in a state with no registration requirement. A foreign-backed funder shut out of Arizona can fund litigation in New York. A case that would attract investment in Kansas, where the funder’s identity remains under judicial seal, may not attract the same investment in Georgia, where the funder faces potential felony liability. Rational capital will flow to the least restrictive jurisdiction. That is not a prediction. It is how capital markets work.
The more interesting question is whether the patchwork is a transitional phase. The direction is clear. Disclosure requirements are expanding at state, federal and judicial levels simultaneously. Foreign funding restrictions are tightening. The insurance industry is building its own parallel disclosure regime. A federal rule, if it arrives, would impose a floor. What the 2025 state statutes have established is the range of the debate. At one end, Kansas: disclose to the court, protect the information and let the system work. At the other, Georgia: register as a financial institution, face criminal penalties for non-compliance and accept joint liability. The litigation finance industry’s task is to ensure that the eventual equilibrium sits closer to Kansas than to Georgia. The six statutes of 2025 have defined the battleground. The 2026 developments suggest the battle is accelerating.
Notes
1. Georgia SB 69, Courts Access and Consumer Protection Act (signed 21 April 2025; registration requirements effective 1 January 2026; discovery provisions effective 21 April 2025). Kansas SB 54, Third-Party Litigation Funding Agreements (signed 7 April 2025). Oklahoma HB 2619, Foreign Litigation Funding Prevention Act (signed May 2025, effective 1 November 2025). Colorado HB 25-1329, Foreign Third-Party Litigation Financing (signed 3 June 2025, effective 6 August 2025). Arizona SB 1215, Litigation Financing Safeguards Act (signed 27 June 2025, effective 31 December 2025). Montana SB 511 (signed 5 May 2025).
2. Indiana HB 1160 (enacted 2024, effective 1 July 2024). Louisiana SB 355 / Act 765 (signed 2024, effective 1 August 2024).
3. Georgia SB 69, ss 3-4. Registration through the Nationwide Multistate Licensing System and Registry (NMLS). The registration requirement became effective on 1 January 2026; the Georgia Department of Banking and Finance issued NMLS registration directions on 1 October 2025.
4. Georgia SB 69, s 7. Penalties for non-compliance range from misdemeanour to felony, with the most serious violations carrying up to five years’ imprisonment and a fine of USD 10,000.
5. H.R. 2675, 119th Congress. Ordered to be reported, as amended, by the House Judiciary Committee 15-11 on 20 November 2025. The bill would ban funding from foreign states and sovereign wealth funds in civil litigation where they are not a named party.
6. H.R. 1109, 119th Congress (introduced 7 February 2025). Lead sponsor: Rep. Darrell Issa (CA-49). The bill remains in the House Committee on the Judiciary.
7. Swiss Re Institute, Social Inflation Index Analysis, Sigma No. 4/2024 (September 2024). US commercial casualty losses grew at an average annual rate of 11% to USD 143 billion in 2023, exceeding total insured losses from global natural catastrophes (USD 108 billion).
8. Kansas SB 54 was jointly supported by the International Legal Finance Association and the U.S. Chamber of Commerce. Senate vote: 40-0 on 26 March 2025.
9. ISO Form CG 99 11 01 26, “Condition—Litigation Funding Mutual Disclosure” endorsement (Verisk/Insurance Services Office), optional endorsement for 2026 commercial liability programmes. Either party may make written demand for mutual disclosure; compliance is a condition of coverage.
10. Advisory Committee on Civil Rules, U.S. Judicial Conference, meeting of 24 October 2025, Washington, DC. The Committee agreed to continue studying whether a new federal rule should mandate TPLF disclosure.
11. S. 3826, Litigation Funding Transparency Act of 2026 (introduced 11 February 2026 by Senators Grassley, Tillis, Kennedy and Cornyn). Covers class actions, MDLs and other large coordinated federal proceedings meeting the bill’s threshold. Referred to Senate Committee on the Judiciary.
12. Florida SB 1396 / HB 1157, Litigation Investment Safeguards and Transparency Act (2026 session). Cleared Senate Judiciary Committee 8-2 on 27 January 2026. Died on calendar 13 March 2026.
13. Pennsylvania Supreme Court Civil Procedural Rules Committee, proposed amendment to Pa.R.Civ.P. 4003.2 concerning disclosure of third-party litigation funding agreements. Comment period closed 22 April 2026.
14. Montana SB 511 (signed 5 May 2025). Amends the Litigation Financing Transparency and Consumer Protection Act and creates the Foreign Investment in Litigation Financing Act. Prohibits foreign adversaries, foreign persons of concern and certain foreign persons from engaging in or investing in litigation financing in Montana. Requires registration with the Secretary of State for foreign persons. Caps funder share at 25% of monetary relief.
References
State Legislation
Arizona SB 1215, Litigation Financing Safeguards Act (57th Legislature, 1st Regular Session). Available at: https://www.azleg.gov/legtext/57leg/1r/laws/0226.htm
Colorado HB 25-1329, Foreign Third-Party Litigation Financing. Available at: https://leg.colorado.gov/bills/HB25-1329
Georgia SB 69, Courts Access and Consumer Protection Act (2025). Available at: https://gov.georgia.gov/document/2025-signed-legislation/sb-69/download
Kansas SB 54, Third-Party Litigation Funding Agreements (Chapter 60, Session Laws of Kansas, 2025). Available at: https://www.sos.ks.gov/publications/sessionlaws/2025/Chapter-60-SB-54.html
Montana SB 511 (2025). Available at: https://legiscan.com/MT/text/SB511/id/3210617
Oklahoma HB 2619, Foreign Litigation Funding Prevention Act (2025). Available at: https://www.oklegislature.gov/cf_pdf/2025-26%20ENR/hB/HB2619%20ENR.PDF
Indiana HB 1160 (enacted 2024, effective 1 July 2024).
Louisiana SB 355 / Act 765 (signed 2024, effective 1 August 2024).
Florida SB 1396 / HB 1157, Litigation Investment Safeguards and Transparency Act (2026 session). Available at: https://www.flsenate.gov/Session/Bill/2026/1396
Federal Legislation
H.R. 1109, Litigation Transparency Act of 2025, 119th Congress. Available at: https://www.congress.gov/bill/119th-congress/house-bill/1109
H.R. 2675, Protecting Our Courts from Foreign Manipulation Act of 2025, 119th Congress. Available at: https://www.congress.gov/bill/119th-congress/house-bill/2675
S. 3826, Litigation Funding Transparency Act of 2026, 119th Congress. Available at: https://www.congress.gov/bill/119th-congress/senate-bill/3826
Regulatory and Industry Sources
Georgia Department of Banking and Finance, Litigation Financiers Registration. Available at: https://dbf.georgia.gov/litigation-financiers
ISO Form CG 99 11 01 26, “Condition—Litigation Funding Mutual Disclosure” Endorsement (Verisk/ISO, 2026 commercial liability programmes).
Advisory Committee on Civil Rules, U.S. Judicial Conference, Agenda Book (24 October 2025). Available at: https://www.uscourts.gov/sites/default/files/document/2025-10_civil_agenda_book_final_10-14.pdf
Pennsylvania Supreme Court Civil Procedural Rules Committee, Proposed Amendment to Pa.R.Civ.P. 4003.2 concerning disclosure of third-party litigation funding agreements (February 2026). Available at: https://www.pacourts.us/Storage/media/pdfs/20260210/140354-proposaltoamendpa.r.civ.p.4003.2-publication.pdf
Swiss Re Institute, ‘Social Inflation: Litigation Costs Drive Claims Inflation’, Sigma No. 4/2024 (September 2024). Available at: https://www.swissre.com/institute/research/sigma-research/sigma-2024-04-social-inflation.html
Commentary
Grassley, C., ‘Grassley Proposes Third-Party Litigation Funding Reform, Foreign Reporting Requirements’, U.S. Senate Committee on the Judiciary (11 February 2026). Available at: https://www.judiciary.senate.gov/press/rep/releases/grassley-proposes-third-party-litigation-funding-reform-foreign-reporting-requirements
Hunton Andrews Kurth, ‘ISO Approves New Litigation Funding Disclosure Condition Endorsement’, Hunton Insurance Recovery Blog (2025). Available at: https://www.hunton.com/hunton-insurance-recovery-blog/iso-approves-new-litigation-funding-disclosure-condition-endorsement
Institute for Legal Reform, ‘Lifting the Shadows: Restating the Case for Reforming Third-Party Litigation Funding’ (2025). Available at: https://instituteforlegalreform.com/blog/lifting-the-shadows-restating-the-case-for-reforming-third-party-litigation-funding-tplf/
National Law Review, ‘Breaking Down the First Legislative Compromise on Commercial Litigation Funding’ (2025). Available at: https://natlawreview.com/article/breaking-down-first-legislative-compromise-commercial-litigation-funding
National Law Review, ‘Georgia Enacts SB 69: Litigation Funding Now Regulated, Discoverable, and Subject to Penalties’ (2025). Available at: https://natlawreview.com/article/georgia-enacts-sb-69-litigation-funding-now-regulated-discoverable-and-subject
Verisk, ‘Montana Enacts the Litigation Financing Transparency and Consumer Protection Act’ (2025). Available at: https://www.verisk.com/blog/montana-enacts-the-litigation-financing-transparency-and-consumer-protection-act–new-law-regulates-tplf-practices-and-includes-disclosure-and-discovery-provisions/
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