The Louisiana Legislature is considering a bill that would limit Louisiana residents’ access to civil courts by imposing new restrictions on plaintiffs in civil lawsuits.
House Bill 240 would require plaintiffs in civil actions to disclose the identity of anyone who would benefit financially from the case, and it would limit how much the funders of the lawsuit could receive from any award of damages.
In third-party litigation funding, an individual, company, or other organization gives a plaintiff or a law firm money to cover the costs of a proposed lawsuit. In turn, the third-party funder receives a share of any judgment or settlement the court may award. If the plaintiff loses the case, the funder gets nothing.
Lawsuits can be very expensive, often costing a fortune for a plaintiff to gather all the evidence necessary to convince a jury of a deep-pocketed defendant’s responsibility in a complex case. Defendants with sufficient money discourage plaintiffs through procedural delays, extensive evidence-discovery costs, and time-consuming legal motions and maneuvers, with the plaintiffs having to pay attorneys hundreds of dollars an hour all the while.
While presented as consumer protection, HB 240 would increase the power of big businesses and large institutions at the expense of the public. Requiring a plaintiff to identify financial backers to the defendants as well as the court creates the obvious possibility that the information could be leaked to the public, subjecting funders to harassment, boycotts, character assassination, public bullying, and worse.
Third-party litigation funding is not burdening the nation’s courts. The number of civil lawsuits per year in the United States on the state and federal levels has declined by about one-third since 2012, Consumer Shield reports. That happened with the third-party litigation funding option in place. Less than 1 percent of state-level lawsuits go to trial, as do less than 2 percent of those filed in federal courts. The rest are settled beforehand or dismissed for other reasons.
A 2022 report by the U.S. Government Accountability Office confirms funders of plaintiffs’ lawsuits are careful about which suits to support, and that they make sure not to interfere in the conduct of the cases. “Funders select the most meritorious cases to fund because they only receive returns when claims are successful,” the report states. Those considerations place a natural, economic limit on this type of funding and the actions of potential donors.
Third-party funding does not abuse the justice system. The goal of a trial is to determine whether a defendant has done what the plaintiff claims, what the damages were, if any, and what remuneration the defendant should make. Who pays the plaintiff’s lawyers is immaterial to that determination. The protection of a funder’s identity removes a potential distraction from the jury’s attention, as the defense lawyers lose the ability to paint the plaintiff as the pawn of a lawsuit abuser who does not care about justice. That argument does not deserve protection.
Limitations on fee sharing and interest rates are likewise unnecessary and unfair. A successful plaintiff in our court system normally has the right to spend the award however he or she chooses. HB 240 would deny plaintiffs that right. In addition, the proposed restrictions do not affect the wealthy defendants in these cases, who can hire all the high-end lawyers they want.
Civil lawsuits are a vital element of a free society. Access to the courts gives people a chance to hold others, including the powerful, responsible for harms they might do. Far from being an instrument of lawsuit abuse, third-party litigation funding democratizes access to the courts. By creating a threat against people who want to bring lawsuits, HB 240 would transfer more power from the people of Louisiana to big corporations and the ultra-wealthy.
The following documents provide useful information about third-party litigation funding and its effects on access to the courts and civil justice.
Text of Louisiana House Bill 240, regulating third party litigation funding, 2026
How Many Court Cases Are Filed Each Year in U.S. Courts?
Consumer Shield documents that the number of lawsuits filed in the United States has been falling for more than a dozen years.
Third-Party Litigation Financing: Market Characteristics, Data, and Trends
In this 2022 study for Congress, the United States Government Accountability Office found third-party litigation funding “[h]elps even the playing field for underfunded plaintiffs.”
Beneath the Surface: A Deeper Dive Into Third-Party Litigation Funding
In this August 2025 article for the Washington Legal Foundation, three attorneys from Redgrave LLP describe third-party litigation funding, examine “important ethical and legal questions [that] persist for attorneys considering the use of third-party funding,” discuss state laws on the practice, and outline the pros and cons for attorneys taking on cases involving third-party funding.
Louisiana Legislature Seeks to Further Regulate Third Party Litigation Funding Agreements
The Tucker Ellis law firm explains what Louisiana House Bill 10 is intended to do and how it would treat “consumer litigation funding agreements” and “commercial litigation funding agreements” differently from each other and impose heavier restrictions on consumer lawsuits.
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S. T. Karnick
S. T. Karnick is a Senior Fellow at The Heartland Institute.
S. T. Karnick is a senior fellow and director of publications for The Heartland Institute.
