Written by Tom Gatens – Florida Citizens Against Litigation Abuse (FL CALA) Executive Director
Florida legislators have a unique opportunity to build on their successful leadership as smart civil justice reform leaders. In fact, they are responsible for protecting the integrity of our courts and the economic well-being of families and businesses across the state by passing House Bill 1157, sponsored by Rep. Fabian Basabe (R-Miami Beach), and Senate Bill 1396, sponsored by Sen. Colleen Barton (R-Lakeland). These common-sense reforms shed much-needed light on the growing and problematic practice of third-party litigation financing (TPLF), which is becoming a major trial courtroom tactic that contributes to civil justice abuses.
The TPLF allows outside investors, often unrelated to the dispute, to finance litigation in exchange for a share of the payout. Since 2015, the industry has exploded into a multibillion-dollar market, but it remains poorly regulated and intentionally opaque. The result is a system in which American courtrooms are increasingly treated like casinos, opening up business to wealthy investors at the expense of American citizens, small businesses, and consumers. To add insult to injury, foreign investors are often able to avoid paying taxes on their profits, but Floridians end up footing the bill.
Economic impacts are not abstract. According to a recent analysis conducted by the Perryman Group on behalf of Citizens Against Abuse Litigation (CALA), TPLF costs the economy more than $607 per year in lost income and reduced purchasing power per household due to higher inflation and slower growth. This is enough money to spend on groceries and gas each week. On top of that exorbitant cost, consumers would lose an additional $192.79 per year in direct costs from TPLF due to inflation.
TPLF contributes to more than $31 billion in inflationary pressures, more than $54 billion in lost economic output each year, and an estimated 454,450 job losses annually as businesses grapple with rising litigation costs and uncertainty. When we think about these losses, simply put, the extra dollars we spend on rising product prices and insurance premiums are dollars that would never go toward college funds, home repairs, or family vacations. When big investment firms fund long-running, large-scale lawsuits to make profits, they aren’t just attacking “big business.” They affect all Americans. Businesses hit by lawsuits are forced to raise prices just to stay in business, and suddenly you’re the one paying more for goods and services, making it harder for people to save money.
All of these losses impact businesses across the country. Excessive litigation abuse limits businesses’ ability to offer competitive wages to consumers, lower prices, and innovate. This downturn in business results in more than $15 billion in lost tax revenue annually at the federal, state, and local levels, ultimately costing the government money. The federal government was hit the hardest, losing about $10 billion. These finances help fund public services such as infrastructure, the public health sector, education, public safety, and local public works, to name a few essentials.
These are more than just numbers on a page. “These findings confirm what we already feel when we go to the checkout counter or pay our monthly bills,” said my colleague Victor Gomez, national CALA spokesperson. TPLF fuels a wave of speculative and protracted litigation, raising prices across the economy, leaving families with less money in their pockets, fewer opportunities for career advancement, and outside investors making millions of dollars.
HB 1157 and SB 1396 do not prohibit litigation funding. Instead, it calls for transparency, disclosure of foreign involvement, and safeguards against undue influence. Florida cannot afford to stand idly by as foreign actors seek to increase their influence through economic and legal systems.
Passing these bills is about fairness, accountability, and protecting Floridians from a justice system distorted by hidden funders, rising costs, and secrecy.
Tom Gaitens – Executive Director, Florida Citizens Against Litigation Abuse (FL CALA)
