ATRA Calls on Governor Edwards to Sign SB 196, Promoting Accountability and Transparency in the Civil Justice System

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“There is an urgent need in Louisiana for greater transparency in civil litigation,” ATRA President Tiger Joyce said.

Today, the American Tort Reform Association (ATRA) applauds the passage of Louisiana Senate Bill 196, which would require mandatory disclosure of litigation financing arrangements, and encourages Governor John Bel Edwards (D) to support and sign the bill.

“Louisiana has long been a target for abusive litigation, and this bill would help protect the state from these practices,” ATRA President Tiger Joyce said. “This legislation would bring much-needed transparency to the civil justice system in Louisiana. We urge Governor Edwards to embrace this opportunity to bolster accountability and enhance the state’s business climate.”

S.B. 196, the Litigation Financing Disclosure and Security Protection Act, is sponsored by Louisiana state Senator Barrow Peacock (R) and introduces critical provisions to address the growing issue of third-party litigation financing (TPLF).

TPLF allows outside financiers, including hedge funds and sovereign/foreign wealth funds, to invest in lawsuits in exchange for a percentage of any settlement or judgment. While this practice has expanded globally, its lack of transparency raises concerns about the potential influence of funders on strategic litigation decisions.

“Litigation financing allows hedge funds and other investors to profit from lawsuits, and it can give these investors undue influence over the litigation process,” Joyce said. “This bill would shine a light on these arrangements and help to ensure justice is served.”

One key provision of S.B. 196 is the mandatory disclosure of litigation financing arrangements. Under this legislation, funders would be required to disclose any litigation financing contracts or agreements in which individuals, other than legal representatives, have received or have a right to receive compensation contingent on the proceeds of the civil action by settlement or judgment. This disclosure requirement will shed light on the extent of control or influence funders have in critical litigation decisions.

“With Governor Edwards’s signature, Louisiana would have a powerful tool to establish and maintain transparency within its civil justice system,” Joyce said. “By requiring disclosure of financing arrangements and allowing their examination during discovery, this legislation takes significant strides toward ensuring a fair and balanced legal environment.”

Louisiana’s ranking as the seventh-worst “Judicial Hellhole®” in the nation emphasizes the critical importance of reforming the state’s legal landscape. The current system places a significant burden on businesses and individuals alike, hindering economic growth and burdening Louisiana residents with a staggering “tort tax” of $1,118.15 per year, as reported by the Perryman Group. The passage of S.B. 196 represents a substantial step towards rectifying these issues and revitalizing the state’s business climate.

“There is an urgent need in Louisiana for greater transparency in civil litigation,” Joyce said. “We want to thank Senator Peacock for championing this important legislation and urge Governor Edwards to sign S.B. 196 into law. The bill’s passage sends a clear message that Louisiana is seeking accountability and fairness in its legal proceedings. This is an opportunity for Governor Edwards to demonstrate his commitment to transparency, fairness, and economic prosperity for the state.”

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