Floridians for Lawsuit Reform has announced that third-party litigation funding allows hidden investors to profit from lawsuits, increasing costs for families and small businesses. The organization is calling for mandatory disclosure reforms. This statement was shared on the social media platform X.
According to the U.S. Government Accountability Office (GAO), litigation funders—often hedge funds or private equity firms—provide capital for lawsuits in return for a share of the award. However, these agreements are not consistently disclosed to courts or opposing parties. The GAO report warns that such secrecy creates risks of conflicts of interest, questions about case control, and even potential national security concerns if foreign investors are involved. The report concludes that policymakers lack reliable data on the scope of the industry because of this lack of transparency.
Research from the U.S. Chamber of Commerce’s Institute for Legal Reform found that tort system costs—amplified by litigation funding—add an average of $6,664 per year to household budgets. This figure reflects higher consumer prices, increased insurance premiums, and lost economic productivity caused by excessive litigation. The study notes that this burden is comparable to a full year’s worth of groceries for a family of four, underscoring how the effects of hidden lawsuit financing reach beyond courtrooms and into everyday living costs.
The same Institute for Legal Reform report indicates that small businesses in the United States shoulder approximately $160 billion annually in tort costs. These costs reduce funds available for wages, job creation, and investment in innovation, placing small enterprises at a competitive disadvantage. Litigation funding arrangements can magnify this pressure by encouraging more cases and inflating settlement demands, further straining small business resources.
According to its official website, Floridians for Lawsuit Reform is a nonprofit organization dedicated to promoting a fair, balanced, and transparent legal system. The group educates the public about the economic costs of lawsuit abuse and supports reforms such as mandatory disclosure of litigation funding agreements. By focusing on the hidden financial impacts of third-party litigation funding, the organization seeks to protect families, workers, and small businesses from rising legal system costs.