RALEIGH, N.C. — North Carolina has become the first state to prohibit third-party litigation investment, a move supporters say will strengthen confidence in the state’s civil justice system.
Gov. Josh Stein signed House Bill 315 into law after it passed the General Assembly with near-unanimous support. The law prohibits outside investors from funding lawsuits in exchange for a share of any financial recovery.
Ken Presley, vice president of industry relations and chief operating officer of the United Motorcoach Association, said third-party litigation funding has become an increasing concern for businesses facing rising claims costs, including bus and motorcoach operators.
“It’s a major factor driving up the cost of claims that every business, including bus and motorcoach companies, should be addressing through state tort reform efforts,” Presley said. “The effects of third-party litigation investment are reflected in today’s insurance premiums.”
North Carolina joins a growing number of states considering legislation to increase transparency surrounding third-party litigation funding. The U.S. Chamber of Commerce has also called on Congress to address the issue.
Stephen Waguespack, president and CEO of the U.S. Chamber Institute for Legal Reform, praised the new law, saying it reflects growing support for civil justice reform.
“For too long, these outside groups have walked away with massive profits while families and local businesses have paid the price,” Waguespack said. “North Carolina has joined the growing nationwide momentum calling for transparency in our civil justice system, and this effort to prohibit litigation funding raises the bar even higher.”
UMA President and CEO Scott Michael said the legislation highlights the importance of state-level tort reform efforts for the motorcoach industry.
“Every meeting I have attended recently has pointed to the importance of motorcoach associations joining in tort reform efforts in their respective states,” Michael said. “Most litigation involving a motorcoach incident takes place in state court.”
