North Carolina has become the first state in the nation to outlaw the controversial practice of third-party litigation funding.
Governor Josh Stein signed House Bill 315, completely banning outside hedge funds and private equity firms from financing civil lawsuits. Under the practice, investors would pay for a plaintiff's legal fees in exchange for a hefty cut of the final jury payout.
Corporate backers and insurance groups pushed hard for the ban, arguing the outside money clogs courts with frivolous lawsuits and inflates settlements. However, trial lawyers fought the bill, warning that stripping away outside funding makes it nearly impossible for everyday citizens to afford the massive upfront costs of suing a major corporation.
