In 2023, Florida took monumental steps to confront the lawsuit abuse that plagued our state for decades. Through comprehensive legal reforms, lawmakers helped to curb frivolous litigation, eliminated unfair one-way attorney fee shifting, and restored balance to comparative negligence rules. These critical changes sent a clear signal that Florida would no longer serve as a playground for abusive judicial schemes, helping to stabilize insurance markets and curb predatory trial bar tactics across the state.
Yet, despite these changes, there are still those who actively seek to undermine our judicial institutions. One of the ways is through third-party litigation financing, which has continued to operate in the dark, skirting around these guardrails and finding new ways to exploit victims and profit off prolonged court cases. While Florida’s legal reforms successfully reined in traditional trial attorney-driven abuses, these third-party investors have largely gone unchecked.
Hidden behind legal loopholes and non-disclosure agreements, these financiers have no reason to foster equitable settlements for victims, often leaving legitimate businesses and families, who depend on our justice system for prompt resolution, to suffer the consequences. For those of us who have spent decades analyzing Florida’s insurance markets, this trend is deeply troubling.
A recent New York Times investigation exposed how exactly the scheme works. These third-party funders help fund personal injury lawsuits, targeting the victims by offering advances to them at exorbitant, compounding interest rates averaging 35 to 45 percent annually. By purchasing a financial stake in the outcome and preying on the emotions of their victims, these unregulated investors drive plaintiffs to reject fair settlement offers in pursuit of massive, drawn-out jackpots.
The ripple effects of this practice directly impact the health of Florida’s insurance ecosystem. High legal costs inflate premiums, raise the cost of goods and services, and clog court dockets for years. For Florida’s small businesses and hardworking families already managing cost-of-living and affordability pressures, this creates profound economic harm.
Additionally, the lack of transparency in litigation funding creates glaring national security concerns and exposes critical vulnerabilities within the American judicial system. A 2024 Bloomberg report revealed how foreign entities, including Russian oligarchs connected to Vladimir Putin, have secretly deployed third-party litigation financing to bypass international sanctions and recover billions of dollars in assets through U.S. courts. Because these financiers operate behind non-disclosure agreements and non-transparent legal loopholes without disclosing their presence to judges, juries, or defense counsel, they can quietly finance protracted legal battles and exert undue control over litigation strategies. Ultimately, third-party litigation financing does not merely exploit vulnerable victims and drive-up legal costs—it actively compromises our courtrooms and undermines national security to the direct benefit of our foreign adversaries.
Lawmakers, to their credit, have made attempts to address this problem. During the 2026 Legislative Session, lawmakers introduced Senate Bill 1396 to establish a real regulatory framework and restore transparency to our courtrooms. Unfortunately, while the Senate bill passed out of the Senate Rules Committee, the House version didn’t receive a committee hearing, and the effort died.
Florida has proven it has the courage to enact groundbreaking market protections, but our work remains unfinished until we address third-party litigation funding. Letting unregulated financiers run rampant by exploiting our legal system undermines every ounce of that hard-won progress. Leaving this loophole open surrenders our courtrooms, our national security, and our local economy to predatory investors who profit at the expense of everyday Floridians. When the legislature reconvenes for the 2027 legislative session, our leaders must finish the job by passing meaningful disclosure standards to bring third-party litigation funding into the light once and for all.
Scott Johnson, AAI, CAE, is an independent consultant and author of five books. He is an expert witness and former regulator who regularly blogs on insurance matters.
