At first glance, the Protect Third Party Litigation Funding from Abuse Act sounds like something conservatives and free-market advocates should naturally support.
Transparency. Guardrails. Consumer protection. Keeping banksters and financiers from gaming the legal system.
Admittedly, on first read, it seemed reasonable. It even triggered a little nostalgia. Back in the early 2000s, conservatives spent years butting heads with the trial bar, pushing tort reform, and trying to rein in lawsuit abuse that drove up healthcare and insurance costs. Seen through that lens, cracking down on third-party litigation funding felt familiar – even responsible.
Yet once you get past the branding, this bill doesn’t do what its advocates claim. Instead of preventing lawsuit abuse, it quietly takes away one of the only tools underfunded plaintiffs have to challenge powerful institutions. And in doing so, it ends up protecting the very corporate behavior conservatives say they’re fed up with.
Third-party litigation funding gets painted as some kind of predatory hedge fund scheme, fueled by foreign money and greedy speculators. It’s a tidy story, but it’s not the truth. In the real world, litigation funding often allows individuals, small businesses, and nonprofits to bring legitimate claims against corporations with unlimited time and money—and that can win simply through attrition.
That imbalance is real and it matters.
When one side has a billion-dollar balance sheet and an army of lawyers on retainer, Lady Justice becomes a platitude rather than a bulwark against special interests captured by ideology. Third-party funding doesn’t rig the game. It makes it possible to play at all.
The legislation would force broad disclosure of funding arrangements, expose them to discovery, and open funders up to liability and regulatory scrutiny that have nothing to do with whether a case is valid. Supporters call that transparency. If we’re being honest and blunt, this legislation is deterrence, signaling to the unwashed masses not to pry, not to ask questions, and certainly not to challenge.
Litigation funding only works if it’s confidential. If funders know their involvement will automatically be handed to opposing counsel, they’ll walk away. Not because the cases are weak, but because the risk calculus changes. The end result isn’t better justice, but fewer cases.
That’s where Republicans should stop and reconsider.
For years now, the right has warned about woke capital whereby corporations using their economic power to push ideological agendas voters would never have approved. ESG mandates. Speech policing. De-banking entire industries or viewpoints. Corporate America hasn’t been subtle about it.
One of the few real checks on that power is the courtroom. Courts are supposed to be where facts and contracts matter more than politics. But litigation is expensive, often brutally so. Without outside funding, many people simply can’t afford to challenge discrimination, retaliation, or coordinated corporate behavior, no matter how strong their case is.
Here’s the irony: the companies cheering loudest for this bill are the least affected by it. Big corporations will still fund their defenses without blinking. They’ll still bury opponents in procedure and delay. What disappears is the credible threat that a smaller player might actually make it to the finish line.
Supporters say the bill prevents abuse. But abuse of whom? There’s little evidence that litigation funding drives frivolous lawsuits. Funders aren’t charities. They don’t throw money at bad cases. They conduct deep due diligence and only back claims they believe can win.
Worse still, this bill sets a precedent conservatives should be wary of. The right has long opposed forced disclosure regimes that chill speech and association. We’ve seen how compelled transparency is weaponized where donors and supporters are targeted, harassed, or pressured into silence. Applying that same logic to litigation funding should set off alarm bells.
It was not that long ago that conservative lawmakers in dozens of states introduced measures to rein in the excesses of social media companies – working hand-in-glove with the Biden administration – after those platforms censored conservatives pushing back against illegal COVID measures and pandemic narratives. Those lessons should not be lost.
I understand why many conservatives initially backed this idea. The name is clever. The pitch hits all the right notes. But good branding doesn’t guarantee good policy.
If we actually care about equal justice under law, about checking corporate overreach, and about making sure the courthouse doors aren’t only open to the wealthy, we should oppose this bill.
The Protect Third Party Litigation Funding from Abuse Act doesn’t rein in abuse.
It restricts access.
Cameron Sholty is the Executive Director of Heartland Impact, the advocacy arm of The Heartland Institute.
