March 2, 2025 • 68 mins
This episode examines Georgia Senate Bill 69, hypocritically entitled the Georgia Courts Access and Consumer Protection Act, which proposes substantial new regulations for third-party litigation funding arrangements. This comprehensive analysis examines the bill's provisions, potential market impacts, and implications for access to justice. While the legislation's stated purpose is consumer protection, the analysis suggests it may significantly restrict the availability of litigation funding, with disproportionate effects on individuals, small businesses, and independent inventors who rely on such funding to pursue meritorious claims against better-resourced opponents.
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(00:53):
Welcome to Episode 3 of the LitigationFunding Podcast!
I'm Erick Robinson, a partner andCo-Chair of the Patent Trial Appeal Board
Practice at Brown Rudnick in Houston.
Thanks for joining me today!
Today, we're diving into a piece oflegislation that's stirring up serious
concerns in the world of litigationfunding-Georgia Senate Bill 69, or as
(01:18):
it's officially called, the GeorgiaCourts Access and Consumer Protection Act.
Now, that title may sound pro-consumer,but when you dig deeper, well, it's not
quite that simple.
This bill introduces some sweepingchanges that could reshape who has access
to the courts, and, spoiler alert, it'snot always in the best way.
(01:40):
Before we get into the discussion, I wantto remind you that, as always, the views
and opinions expressed in this podcast donot necessarily represent those of Brown
Rudnick.
This podcast is presented forinformational and educational purposes
(02:01):
only.
Now let's get into the Georgia Bill.Let'sstart with the basics.
Litigation funding, as many of you likelyknow, is when a third party provides
financial backing to plaintiffs inexchange for a share of any financial
recovery.
It's basically a way for people or smallbusinesses without deep pockets to take
(02:22):
on bigger entities-corporations,occasionally even Goliaths, if we're
being dramatic-and actually stand achance in court.
It's a global industry valued at $11.3billion, with growing prominence here in
the U.S.
And for small business owners, individualinventors, or anyone going toe-to-toe
with powerful opponents, litigationfunding can be a lifeline.Now, Georgia
(02:46):
Senate Bill 69, it seems, takes aimsquarely at this practice.
The bill mandates that funders registerwith the state and submit detailed
ownership disclosures, including down to5% ownership stakes, histories of key
personnel, and, frankly, an almostexhaustive account of their operations.
(03:09):
And to make matters even more complicated?
All of this gets dumped into the publicrecord.
That's transparency taken to theextreme-it's more like a public airing of
everything you've ever done.But that'snot all.
The bill also introduces joint andseveral liability.
What does that mean?
Well, funders could find themselvesliable for sanctions or costs imposed on
(03:34):
plaintiffs-costs that could arise fromthe plaintiffs' behavior, even if the
funders themselves weren't directlyinvolved.
It's like co-signing someone's car lease,except if they damage the car, you're
somehow fully responsible.
Predictably, this kind of open-endedliability is enough to send funders
(03:55):
packing from the Georgia market.
And who does that hurt most?
The little guys.The legislation furtherlayers on restrictive provisions:
mandatory contract language, rulesgoverning what funders can advertise, and
even bans on assigning or securitizingagreements.
Oh, and all litigation funding agreementsbecome subject to discovery during
(04:19):
lawsuits, which, let's be real, only addscomplexity and more delays to already
slow-moving court cases.
It's a lot, isn't it?
Almost like the bill is actively tryingto suffocate this industry into
nonexistence.But here's the emotionalcore of the issue: the direct impact on
(04:40):
those who rely on litigation funding.
Independent inventors, for example-thesefolks already face an uphill battle with
patent litigation often costing millions.
Without funding, most are left withoutthe resources to even bring their claims
to court, leaving them vulnerable tocorporate players who, let's say, aren't
(05:03):
above infringing on intellectual property.
And when funding dries up, so does accessto justice for many of these inventors
and small businesses.
It's a harsh reality, yet one that's easyto overlook in the abstract language of a
bill.
At its core, this legislation feels lesslike a fine-tuning of consumer
(05:26):
protections and more like a completeoverhaul that tilts the scales of
justice-further away from economic equity.
The irony isn't subtle (05:34):
the bill claims to protect consumers, yet for most, it
places justice even further out ofreach.Alright, let's get into the
nitty-gritty of what this bill means forpatent litigation, because the stakes
here?
They're sky-high.
Imagine you're an independent inventorwith a groundbreaking idea-a patent that
(05:57):
could disrupt the market.
And then, a major corporation comesalong, infringes on your patent, and
basically dares you to fight them incourt.
Now, here's the problem (06:09):
patent litigation can easily cost millions of
dollars.
For small inventors or startups, that'sjust not feasible without financial
backing.This is where litigation fundinghas been nothing short of a game-changer.
It levels the playing field-or at leastgets us closer to one.
(06:30):
But if Georgia Senate Bill 69 goesthrough, well, the calculus changes
pretty quickly.
Right now, funders typically expectreturns of around twenty to twenty-five
percent for backing high-risk litigation.
Under the bill's restrictions, thosereturns could drop to eight to twelve
(06:53):
percent.
And for funders?
That's just not enough to justify therisks.
Suddenly, they're much less interested intaking on these David-versus-Goliath
cases.Without funding, those cases don'tjust get harder-they disappear entirely.
Think about it (07:09):
there are already success stories where small inventors used
litigation funding to win against massivecorporate defendants.
Cases where courts forced companies topay for infringement, restoring some
sense of justice.
Without that financial support, thosevictories?
(07:30):
They never would've happened.
And that's not just unfortunate-itcreates systemic barriers to innovation.
It's the kind of thing that discouragesinventors from even bothering to defend
their rights.But here's something toconsider: do we even need these new rules?
The existing system already hasguardrails.
(07:51):
Courts, for example, have the authorityto require disclosure of litigation
funding if it's relevant to the case.
And attorneys?
They're bound by ethical obligations notto let funders interfere with their
professional judgment.
The Georgia Rules of Professional Conductmake it crystal clear: lawyers work in
(08:14):
the best interests of their clients, notthe funders.
So the question is, are we really in aWild West situation here, or is this bill
just creating problems where none reallyexist?And let me not forget the
administrative burden.
We're talking about ongoing registrationand operational costs for funders-costs
(08:38):
that will likely push smaller entitiesout of the market altogether.
For independent inventors or smallbusiness owners relying on those funders,
that's just another door slamming shut.
Oh, and let's not skip over the joint andseveral liability clause.
That makes funders responsible forsanctions or costs imposed on plaintiffs,
(09:01):
even when funders themselves have donenothing wrong.
It's like asking someone else to hold thebag for your mistakes.
Hardly an enticing prospect for investors.
So, what's the upshot?
Senate Bill 69 doesn't just increaseregulatory hurdles; it changes the entire
risk equation for funders, creating adisincentive to back the very cases that
(09:27):
need it the most.
The result?
Independent inventors and smallbusinesses lose crucial access to
justice, while larger entities continueto dominate the legal landscape
unabated.Let's break this down by casetype, because, honestly, Senate Bill 69
(09:48):
isn't gonna hit all kinds of litigationthe same way.
It's not a one-size-fits-all situationhere.
So first up?
Patent litigation.
And let me just tell you, this is wherethe impact is gonna feel like a sucker
punch.
Patent cases are notoriouslyexpensive-seriously, think two to five
(10:12):
million dollars just to get through trial.
For smaller inventors or startups, that'salready a massive hurdle.
Now, most funders in these cases expectreturns in the twenty to twenty-five
percent range.
But under the new restrictions?
We're looking at returns dropping all theway to, what, eight to twelve percent?
(10:34):
And funders, well, they're not exactly inthe business of taking massive risks for
razor-thin margins.
So, bam, they're effectively out of thegame before it even starts.And this isn't
just theoretical.
There are actual examples of independentinventors using litigation funding to
defend their patents and win against hugecorporations.
(10:57):
Without that funding, those winsjust-poof-don't happen.
And really, it's not just inventors wholose here.
It's innovation itself.
Why fight to protect your groundbreakingidea if you know you can't afford the
battle, right?
Now, let's talk about mass tort andcomplex litigation-things like big
(11:18):
environmental lawsuits or productliability cases.
These cases?
They're resource vacuums.
You've got expert witnesses, endlessdiscovery battles, trials that drag on
for years.
It's like a money pit.
For funders, the return on investment isalready tricky.
But then you add the joint and severalliability from this bill?
(11:42):
It's a big neon sign that says, "Investhere at your own peril." Predictably, a
lot of funders are just gonna, well,steer clear entirely.So who does that
hurt?
The plaintiffs, obviously.
These are often victims of massiveharms-think defective products, toxic
spills.
Without funding, these cases never evenmake it to court.
(12:05):
And the corporations causing the harm?
They get to sidestep accountabilityentirely, which, let's be honest, isn't
exactly justice, is it?
Commercial disputes are next on the list.
Initially, these might look like thesafer, less expensive cases to fund.
And sure, they do cost less than patentor mass tort cases-maybe seven hundred
(12:29):
thousand to a couple million bucks tops.
But the bill's restrictions still hammerdown returns here, too, and-well-when
those profits shrink, funders get pickier.
The unfortunate twist is that smallbusinesses are the most affected.
When you're a local retailer taking on amajor supplier for breach of contract,
(12:51):
funding might've been your only way toget through court.
Without it?
You're just up against a corporatejuggernaut with no real shot at leveling
the playing field.So, yeah, the marketimpact of Senate Bill 69 isn't some
abstract economic shift-it's a direct hitto those who actually need the justice
(13:15):
system to work for them.
And the bigger players?
They'll be just fine.
They're, you know, sitting in thedriver's seat, benefiting from the
barriers this bill creates for everyoneelse.Alright, let's take a step back here
and ask a basic question (13:28):
do we really need the changes Senate Bill 69 is
proposing?
Because, as it stands, the tools wealready have in place seem, well, more
than capable of handling the issues itclaims to address.
Let's break this down.
First off, the courts aren't exactlypowerless when it comes to overseeing
(13:53):
litigation funding.
Federal and state courts already havesignificant authority under the Federal
Rules of Civil Procedure.
If funding arrangements are actuallyrelevant to a case, judges can demand
disclosure.
And believe me, they don't hesitate tostep in when something's off.
It's not like we're dealing with aprocedural free-for-all here.Now, let's
(14:14):
talk about attorneys.
Georgia's Rules of Professional Conductare crystal clear: lawyers are obligated
to act in the best interest of theirclients-period.
Rule 5.4 flat-out prohibits funders oranyone else from controlling the
decisions a lawyer makes in a case.
That's already a rock-solid safeguard.
I mean, if someone's ignoring thoserules, the issue isn't a lack of
(14:39):
regulation; it's enforcement.
And for the record, these ethicalboundaries have held up just fine for
decades.
But that's not all.
The funding industry itself has developedits own best practices over the years.
It's not like these funders are out hereflying blind.
Most comply with standards requiringclaimants to have independent counsel,
(15:02):
and their agreements explicitly statethat funders don't interfere with legal
strategy or settlement decisions.
These are market-driven solutions thatstrike a balance between transparency and
access.So, what is Senate Bill 69 tryingto fix, exactly?
The courts have authority.
(15:24):
The lawyers have rules.
The market has evolved checks andbalances.
What we're looking at isn't a lack ofoversight-it's redundant regulation that
could do more harm than good.
By introducing heavy-handed requirements,this bill risks pushing funders out of
the market entirely, leaving countlessplaintiffs without the support they need.
(15:46):
And if we're being honest, these systemsaren't just sufficient-they're
time-tested.
They hold up under scrutiny withoutthrowing unnecessary roadblocks in the
way.
At a certain point, you have to wonder,are we regulating to solve a real
problem, or are we just creating problemsfor the sake of looking busy?Alright,
(16:08):
let's zoom out for a minute becauseGeorgia isn't the only player in this
game.
There are jurisdictions out there thathave handled litigation funding more,
well, thoughtfully.
Instead of overregulation that sendsfunders running for the hills, they've
managed to strike a balance.
So, how do they do it?
Let's start with the United Kingdom.
(16:28):
Over there, litigation funding operatesunder a self-regulatory framework led by
the Association of Litigation Funders, orALF for short.
The ALF Code of Conduct ensures funderskeep enough capital on hand, don't walk
away from cases without good reason,and-this is key-make it clear that
(16:50):
claimants maintain control over decisionslike settlements.
Courts still have oversight whennecessary, but they don't micromanage the
process.
It's flexible, and honestly, itworks.Then there's Australia.
They take a slightly different route,requiring funders to register as managed
(17:11):
investment schemes.
Now, that might sound like a bureaucraticheadache, but the key difference is that
their system emphasizes disclosureswithout making them, you know, so
invasive that funders feel exposed or atrisk.
Courts can tweak funding agreements ifthey seem unfair, but there's no
(17:35):
equivalent to Georgia's joint and severalliability provision-thankfully.Now, let's
circle back to the United States.
States like Wisconsin and Maine havetaken a more moderate approach.
Wisconsin, for example, mandatesstraightforward disclosures between
funded parties and claimants, withoutbroadcasting every contract detail to
(17:59):
competitors or the public.
And Maine?
They cap funding rates for consumerlitigation but stop short of imposing
punitive liabilities or unnecessarilyrigid requirements.
These state-level models show it'sentirely possible to protect litigants
without crushing the funding marketaltogether.
So, what's the lesson here?
(18:20):
Regulation doesn't have to be, let's say,'one-size-fits-all.' There are smarter,
more targeted ways to provide oversightwithout dismantling a system that's,
frankly, indispensable for many peopletrying to access justice.Alright, so
let's take a moment and think about thereal-world effects of Senate Bill 69.
And when I say "real-world," I mean thepeople who bear the brunt of these
(18:46):
changes-individuals, small businesses,and those tied up in the most challenging
lawsuits like mass tort cases.
Because, let's face it, these aren't justtweaks to the system-we're talking about
barriers that could reshape the legallandscape entirely.
Let's start with individuals.
(19:08):
For them, litigation funding is often theonly lifeline they have to file claims
against big corporations.
Imagine being harmed by, say, a defectiveproduct or environmental contamination.
Cases like that require high-end expertanalysis, mountains of documentation, and
(19:31):
court costs that rack up faster than aNew York cab meter.
Without funding?
Well, a lot of claims just die beforethey're even filed.
And the corporations responsible?
They skate by without ever being heldaccountable.And let's not overlook small
businesses-they're equally at risk here.
(19:54):
Picture a family-owned company that'sbeen wronged by a multi-billion-dollar
corporation.
The legal costs alone could bankrupt thembefore the case even gets to court.
Litigation funding is how these smallerplayers level the field-or at least try
to.
But this bill?
(20:14):
It slashes the funding opportunities to afraction of what they are now, leaving
small businesses with, frankly, no goodoptions.
As far as David versus Goliath battlesgo, it's like taking David's slingshot
away and handing Goliath a shield on topof it.And then there's the mess that is
(20:34):
mass tort litigation.
Let's say we're dealing with victims oftoxic spills or faulty medical devices.
These lawsuits?
They're not cheap to run.
We're talking millions-experts,discovery, years of trial prep.
Without funding, you basically shut thedoor on claims like this altogether.
It's harsh, but it's the truth (20:55):
fewer funders means fewer cases, period.
And the corporations who stand on theother side of these lawsuits?
They get to keep dodging liability, whilethe victims are left holding the bag.
Now, the real irony here is that allthese changes are supposedly about
(21:19):
consumer protection.
But the consumers they're claiming toprotect?
They're the ones losing out.
Senate Bill 69 places access to justicefurther out of reach for the very people
who need it most, all while making iteasier for larger, well-funded players to
(21:40):
dominate.
You've got to wonder if "protection" isreally what's at play here.Alright, let's
put Senate Bill 69 under the microscopeand ask the hard question: who actually
benefits from this, and who gets left inthe dust?
Because, let's face it, most legislationhas winners and losers, and this bill?
(22:01):
No exception.
Let's start with the winners, shall we?
Big corporations-they've got to begrinning ear to ear right now.
Why?
Well, fewer funding options mean fewerfunded plaintiffs.
So, if you're a corporate defendant withdeep pockets?
This is basically a dream come true.
(22:23):
You can drag cases out, pile up legalcosts, and outlast opponents who can no
longer afford to keep going.
It's like giving Goliath better armorwhile taking stones away from David.
Not exactly a fair fight, is it?And let'snot forget the insurance companies.
For them, this is a golden ticket.
(22:44):
The fewer claims that make it to court,the fewer payouts they have to make.
Honestly, predictable wins for them, butat what cost?
You've got to wonder if their bottom lineis worth leaving legitimate claims on the
cutting-room floor.
Now, who's on the losing side?
Well, where do I start?
(23:05):
Individuals with legitimate claimsagainst big corporations?
They're struggling without financialbacking.
Small businesses trying to stand upagainst unfair practices?
They're, well, totally outmatched.
And independent inventors?
Oh boy, for them, this bill is like anightmare.Take inventors and startups,
(23:25):
for example.
Many of them rely on litigation fundingto protect their intellectual property.
Without it, enforcing their patentsbecomes borderline impossible.
And corporate infringers know this.
Some of them practice what's called"efficient infringement," which is a
fancy way of saying they ignore the rulesbecause they know most people can't
(23:48):
afford to fight back.
It's...
it's demoralizing, really.
And small businesses?
Same story.
Without funding, how does a localentrepreneur even put up a fight against
a giant corporation with an entire legaldepartment on standby?
Answer (24:07):
they usually don't.
It's a cold, hard truth that this bill,if passed, could end a lot of legal
battles before they even start.Thenthere's mass tort cases-the really big
ones involving environmental damage,defective products, systemic negligence.
These lawsuits cost millions to seethrough.
(24:28):
Without funders stepping up, well, mostof them never get off the ground.
And the victims?
They're left staring at an insurmountablewall while the companies responsible walk
away unscathed.
It's...
yeah, it's a bleak picture.Alright, let'sswitch gears a bit and talk solutions,
(24:51):
because we've spent a lot of timedissecting what's wrong with Senate Bill
69.
Now, the question is, what could a morebalanced approach actually look like?
How do we address legitimate concernswithout, you know, setting the whole
system on fire?
First up, disclosure and transparency.
Now, don't get me wrong, transparency canabsolutely serve the public good, but it
(25:14):
needs to be, well, reasonable-targeted.
The current bill's demand for funders tospill every operational secret into
public records?
That's not transparency; that's a recipefor stifling competition.
Instead, why not focus on clear,client-focused disclosures?
(25:34):
Things like explaining the terms offunding, projected costs, and potential
recovery scenarios.
Add an attorney sign-off to ensure allparties fully understand the deal, and
boom, you've got meaningful transparencywithout the overreach.Next, consumer
protections.
Look, no one wants predatorypractices-nobody-but let's not pretend
(25:57):
those require a regulatory sledgehammer.
Reasonable rate caps tailored toindividual plaintiffs might make sense.
But here's the kicker (26:04):
those caps need to leave room for funders to still find
these cases worth pursuing, especiallythe complex ones.
Striking that balance is tough, sure, butit's possible if we avoid lumping all
funding contracts into one rigidframework.
(26:25):
Nuance, people, nuance.
And what about operational requirements?
Right now, the bill's demands are soextreme, small funders might as well just
close up shop.
Instead, why not take a more targetedapproach-say, capital adequacy rules that
(26:45):
ensure funders have the resources to backtheir commitments without suffocating
smaller players?
You don't need an industry to be entirelydominated by a few massive funders to
maintain oversight.
Smaller, precise adjustments could fixthis part without gutting the
market.Look, the point is that none ofthese measures have to be all-or-nothing.
(27:11):
If we focus on designing laws thatgenuinely seek improvements-not
headline-ready overcorrections-we canaddress concerns without derailing access
to justice for individuals, smallbusinesses, and independent inventors.
Regulation doesn't have to meanextinction.Alright, so let's tackle the
(27:34):
elephant in the room-implementation.
Because, let's be honest, as it stands,the framework in Senate Bill 69 is not
just overly ambitious-it's, well, almostself-sabotaging.
But the good news?
We've got room to pivot here, startingwith those registration requirements.
Right now, funders have to submit whatbasically amounts to a corporate history
(27:56):
lesson-every little operational detail,including ownership thresholds as low as
five percent-and, oh yeah, all of thatbecomes public.
Now, while transparency matters, there'sa fine line between oversight and airing
out proprietary secrets for competitorsto ogle.
One simple fix?
Keep sensitive information-key financialdata, funder strategies-confidential.
(28:21):
It still affords oversight without makingfunders feel like they're writing their
competition a playbook.Next up, thoseliability provisions.
Joint and several liability?
It's-how do I put this delicately-anabsolute minefield.
Holding funders entirely responsible forbehavior they had no part in?
(28:42):
That's not regulation; it's a recipe forretreat.
Instead, liability needs clear boundaries.
For example, funders could be heldproportionally responsible for actual
misconduct they're tied to, but not forevery misstep the plaintiffs take.
It's about matching the responsibility tothe role-not throwing funders under an
(29:07):
entire legal bus for being on theperiphery of a case.
Ah, and then there's discovery.
Right now, the bill wants to make allfunding agreements fair game in court,
regardless of relevance.
Let me just say, that kind of blanketrule is asking for trouble.
Instead, why not let judges evaluatefunding agreements
(29:30):
in-camera-privately-when there's anactual issue at stake?
It's straightforward and ensuresdiscovery stays focused, without turning
litigation into a fishingexpedition.Alright, let's face it, Senate
(29:51):
Bill 69?
As it stands, it's less about protectingconsumers and more about slamming the
door on everyday people who need accessto justice.
And for those of us paying attention,it's clear this bill isn't a done deal
yet-there's still room to act.
So, if we're serious about avoiding thefallout, let's break down how we can
(30:14):
actually make a difference here.
First, direct legislative outreach.
Sounds simple, but it's incrediblyeffective.
Call your state representatives-emailthem, even.
They need to hear from real constituents,people who actually understand how this
bill could play out in the real world.
Like, let's be clear (30:36):
lawmakers don't always know the full impact of what
they're voting on.
Hearing specific stories-successesbrought about by litigation funding-well,
that's the kind of thing that can reallychange the narrative.Now, let's talk
about professional associations.
Whether it's the Georgia Trial Lawyers orthe Small Business Alliance, these groups
(31:00):
carry weight.
Their influence can amplify thisconversation in ways that one-off voices
simply can't.
So, if you're part of an association,now's the time to rally them.
Their advocacy-backed by real-worldexamples-can push back against the more
(31:21):
extreme measures of this bill, you know?
And don't sleep on public comments ortestimony.
When this bill heads to committeehearings, there's usually an open floor
for input-written comments or even livetestimony, if you're up for it.
I mean, the truth is, sharing how thislegislation impacts actual people has a
(31:44):
way of cutting through all the legaljargon.
Keep it direct, make it emotional if youhave to-whatever it takes to get their
attention.Finally-and this iskey-coalition building.
You've got small business owners,inventors, consumer advocates, even legal
professionals, all affected by differentpieces of this bill.
(32:07):
By organizing across these groups, it'spossible to bring a unified front to the
table.
And trust me, lawmakers notice when adiverse coalition comes knocking.
That's how you build momentum.
That's how you make it impossible forthem to ignore the real-world impact of
this legislation.
(32:28):
Look, at the end of the day, this isn'tabout stopping all regulation-it's about
pushing for balance.
Regulation that doesn't destroy crucialresources like litigation funding.
Because the reality is, taking this toolaway doesn't just hurt plaintiffs, it
tips the entire system further in favorof those who already hold all the power.
(32:54):
And, honestly, I think we're all ready tosee a justice system that's just a little
more equitable, don't you?On that note,we'll leave it here for today.
Thanks for tuning in to The AI LawPodcast.
Until next time, take care, stayinformed, and don't underestimate the
power of your voice.
(33:14):
Change happens when people speak up-solet's keep the balance in play.
Thanks for joining me today!
Please reach out with any questions,comments, or discussion ideas!
Be well!
Welcome to Episode 3 of the LitigationFunding Podcast!
I'm Erick Robinson, a partner andCo-Chair of the Patent Trial Appeal Board
Practice at Brown Rudnick in Houston.
Thanks for joining me today!
Today, we're diving into a piece oflegislation that's stirring up serious
concerns in the world of litigationfunding-Georgia Senate Bill 69, or as
(01:18):
it's officially called, the GeorgiaCourts Access and Consumer Protection Act.
Now, that title may sound pro-consumer,but when you dig deeper, well, it's not
quite that simple.
This bill introduces some sweepingchanges that could reshape who has access
to the courts, and, spoiler alert, it'snot always in the best way.
(01:40):
Before we get into the discussion, I wantto remind you that, as always, the views
and opinions expressed in this podcast donot necessarily represent those of Brown
Rudnick.
This podcast is presented forinformational and educational purposes
(02:01):
only.
Now let's get into the Georgia Bill.Let'sstart with the basics.
Litigation funding, as many of you likelyknow, is when a third party provides
financial backing to plaintiffs inexchange for a share of any financial
recovery.
It's basically a way for people or smallbusinesses without deep pockets to take
(02:22):
on bigger entities-corporations,occasionally even Goliaths, if we're
being dramatic-and actually stand achance in court.
It's a global industry valued at $11.3billion, with growing prominence here in
the U.S.
And for small business owners, individualinventors, or anyone going toe-to-toe
with powerful opponents, litigationfunding can be a lifeline.Now, Georgia
(02:46):
Senate Bill 69, it seems, takes aimsquarely at this practice.
The bill mandates that funders registerwith the state and submit detailed
ownership disclosures, including down to5% ownership stakes, histories of key
personnel, and, frankly, an almostexhaustive account of their operations.
(03:09):
And to make matters even more complicated?
All of this gets dumped into the publicrecord.
That's transparency taken to theextreme-it's more like a public airing of
everything you've ever done.But that'snot all.
The bill also introduces joint andseveral liability.
What does that mean?
Well, funders could find themselvesliable for sanctions or costs imposed on
(03:34):
plaintiffs-costs that could arise fromthe plaintiffs' behavior, even if the
funders themselves weren't directlyinvolved.
It's like co-signing someone's car lease,except if they damage the car, you're
somehow fully responsible.
Predictably, this kind of open-endedliability is enough to send funders
(03:55):
packing from the Georgia market.
And who does that hurt most?
The little guys.The legislation furtherlayers on restrictive provisions:
mandatory contract language, rulesgoverning what funders can advertise, and
even bans on assigning or securitizingagreements.
Oh, and all litigation funding agreementsbecome subject to discovery during
(04:19):
lawsuits, which, let's be real, only addscomplexity and more delays to already
slow-moving court cases.
It's a lot, isn't it?
Almost like the bill is actively tryingto suffocate this industry into
nonexistence.But here's the emotionalcore of the issue: the direct impact on
(04:40):
those who rely on litigation funding.
Independent inventors, for example-thesefolks already face an uphill battle with
patent litigation often costing millions.
Without funding, most are left withoutthe resources to even bring their claims
to court, leaving them vulnerable tocorporate players who, let's say, aren't
(05:03):
above infringing on intellectual property.
And when funding dries up, so does accessto justice for many of these inventors
and small businesses.
It's a harsh reality, yet one that's easyto overlook in the abstract language of a
bill.
At its core, this legislation feels lesslike a fine-tuning of consumer
(05:26):
protections and more like a completeoverhaul that tilts the scales of
justice-further away from economic equity.
The irony isn't subtle (05:34):
the bill claims to protect consumers, yet for most, it
places justice even further out ofreach.Alright, let's get into the
nitty-gritty of what this bill means forpatent litigation, because the stakes
here?
They're sky-high.
Imagine you're an independent inventorwith a groundbreaking idea-a patent that
(05:57):
could disrupt the market.
And then, a major corporation comesalong, infringes on your patent, and
basically dares you to fight them incourt.
Now, here's the problem (06:09):
patent litigation can easily cost millions of
dollars.
For small inventors or startups, that'sjust not feasible without financial
backing.This is where litigation fundinghas been nothing short of a game-changer.
It levels the playing field-or at leastgets us closer to one.
(06:30):
But if Georgia Senate Bill 69 goesthrough, well, the calculus changes
pretty quickly.
Right now, funders typically expectreturns of around twenty to twenty-five
percent for backing high-risk litigation.
Under the bill's restrictions, thosereturns could drop to eight to twelve
(06:53):
percent.
And for funders?
That's just not enough to justify therisks.
Suddenly, they're much less interested intaking on these David-versus-Goliath
cases.Without funding, those cases don'tjust get harder-they disappear entirely.
Think about it (07:09):
there are already success stories where small inventors used
litigation funding to win against massivecorporate defendants.
Cases where courts forced companies topay for infringement, restoring some
sense of justice.
Without that financial support, thosevictories?
(07:30):
They never would've happened.
And that's not just unfortunate-itcreates systemic barriers to innovation.
It's the kind of thing that discouragesinventors from even bothering to defend
their rights.But here's something toconsider: do we even need these new rules?
The existing system already hasguardrails.
(07:51):
Courts, for example, have the authorityto require disclosure of litigation
funding if it's relevant to the case.
And attorneys?
They're bound by ethical obligations notto let funders interfere with their
professional judgment.
The Georgia Rules of Professional Conductmake it crystal clear: lawyers work in
(08:14):
the best interests of their clients, notthe funders.
So the question is, are we really in aWild West situation here, or is this bill
just creating problems where none reallyexist?And let me not forget the
administrative burden.
We're talking about ongoing registrationand operational costs for funders-costs
(08:38):
that will likely push smaller entitiesout of the market altogether.
For independent inventors or smallbusiness owners relying on those funders,
that's just another door slamming shut.
Oh, and let's not skip over the joint andseveral liability clause.
That makes funders responsible forsanctions or costs imposed on plaintiffs,
(09:01):
even when funders themselves have donenothing wrong.
It's like asking someone else to hold thebag for your mistakes.
Hardly an enticing prospect for investors.
So, what's the upshot?
Senate Bill 69 doesn't just increaseregulatory hurdles; it changes the entire
risk equation for funders, creating adisincentive to back the very cases that
(09:27):
need it the most.
The result?
Independent inventors and smallbusinesses lose crucial access to
justice, while larger entities continueto dominate the legal landscape
unabated.Let's break this down by casetype, because, honestly, Senate Bill 69
(09:48):
isn't gonna hit all kinds of litigationthe same way.
It's not a one-size-fits-all situationhere.
So first up?
Patent litigation.
And let me just tell you, this is wherethe impact is gonna feel like a sucker
punch.
Patent cases are notoriouslyexpensive-seriously, think two to five
(10:12):
million dollars just to get through trial.
For smaller inventors or startups, that'salready a massive hurdle.
Now, most funders in these cases expectreturns in the twenty to twenty-five
percent range.
But under the new restrictions?
We're looking at returns dropping all theway to, what, eight to twelve percent?
(10:34):
And funders, well, they're not exactly inthe business of taking massive risks for
razor-thin margins.
So, bam, they're effectively out of thegame before it even starts.And this isn't
just theoretical.
There are actual examples of independentinventors using litigation funding to
defend their patents and win against hugecorporations.
(10:57):
Without that funding, those winsjust-poof-don't happen.
And really, it's not just inventors wholose here.
It's innovation itself.
Why fight to protect your groundbreakingidea if you know you can't afford the
battle, right?
Now, let's talk about mass tort andcomplex litigation-things like big
(11:18):
environmental lawsuits or productliability cases.
These cases?
They're resource vacuums.
You've got expert witnesses, endlessdiscovery battles, trials that drag on
for years.
It's like a money pit.
For funders, the return on investment isalready tricky.
But then you add the joint and severalliability from this bill?
(11:42):
It's a big neon sign that says, "Investhere at your own peril." Predictably, a
lot of funders are just gonna, well,steer clear entirely.So who does that
hurt?
The plaintiffs, obviously.
These are often victims of massiveharms-think defective products, toxic
spills.
Without funding, these cases never evenmake it to court.
(12:05):
And the corporations causing the harm?
They get to sidestep accountabilityentirely, which, let's be honest, isn't
exactly justice, is it?
Commercial disputes are next on the list.
Initially, these might look like thesafer, less expensive cases to fund.
And sure, they do cost less than patentor mass tort cases-maybe seven hundred
(12:29):
thousand to a couple million bucks tops.
But the bill's restrictions still hammerdown returns here, too, and-well-when
those profits shrink, funders get pickier.
The unfortunate twist is that smallbusinesses are the most affected.
When you're a local retailer taking on amajor supplier for breach of contract,
(12:51):
funding might've been your only way toget through court.
Without it?
You're just up against a corporatejuggernaut with no real shot at leveling
the playing field.So, yeah, the marketimpact of Senate Bill 69 isn't some
abstract economic shift-it's a direct hitto those who actually need the justice
(13:15):
system to work for them.
And the bigger players?
They'll be just fine.
They're, you know, sitting in thedriver's seat, benefiting from the
barriers this bill creates for everyoneelse.Alright, let's take a step back here
and ask a basic question (13:28):
do we really need the changes Senate Bill 69 is
proposing?
Because, as it stands, the tools wealready have in place seem, well, more
than capable of handling the issues itclaims to address.
Let's break this down.
First off, the courts aren't exactlypowerless when it comes to overseeing
(13:53):
litigation funding.
Federal and state courts already havesignificant authority under the Federal
Rules of Civil Procedure.
If funding arrangements are actuallyrelevant to a case, judges can demand
disclosure.
And believe me, they don't hesitate tostep in when something's off.
It's not like we're dealing with aprocedural free-for-all here.Now, let's
(14:14):
talk about attorneys.
Georgia's Rules of Professional Conductare crystal clear: lawyers are obligated
to act in the best interest of theirclients-period.
Rule 5.4 flat-out prohibits funders oranyone else from controlling the
decisions a lawyer makes in a case.
That's already a rock-solid safeguard.
I mean, if someone's ignoring thoserules, the issue isn't a lack of
(14:39):
regulation; it's enforcement.
And for the record, these ethicalboundaries have held up just fine for
decades.
But that's not all.
The funding industry itself has developedits own best practices over the years.
It's not like these funders are out hereflying blind.
Most comply with standards requiringclaimants to have independent counsel,
(15:02):
and their agreements explicitly statethat funders don't interfere with legal
strategy or settlement decisions.
These are market-driven solutions thatstrike a balance between transparency and
access.So, what is Senate Bill 69 tryingto fix, exactly?
The courts have authority.
(15:24):
The lawyers have rules.
The market has evolved checks andbalances.
What we're looking at isn't a lack ofoversight-it's redundant regulation that
could do more harm than good.
By introducing heavy-handed requirements,this bill risks pushing funders out of
the market entirely, leaving countlessplaintiffs without the support they need.
(15:46):
And if we're being honest, these systemsaren't just sufficient-they're
time-tested.
They hold up under scrutiny withoutthrowing unnecessary roadblocks in the
way.
At a certain point, you have to wonder,are we regulating to solve a real
problem, or are we just creating problemsfor the sake of looking busy?Alright,
(16:08):
let's zoom out for a minute becauseGeorgia isn't the only player in this
game.
There are jurisdictions out there thathave handled litigation funding more,
well, thoughtfully.
Instead of overregulation that sendsfunders running for the hills, they've
managed to strike a balance.
So, how do they do it?
Let's start with the United Kingdom.
(16:28):
Over there, litigation funding operatesunder a self-regulatory framework led by
the Association of Litigation Funders, orALF for short.
The ALF Code of Conduct ensures funderskeep enough capital on hand, don't walk
away from cases without good reason,and-this is key-make it clear that
(16:50):
claimants maintain control over decisionslike settlements.
Courts still have oversight whennecessary, but they don't micromanage the
process.
It's flexible, and honestly, itworks.Then there's Australia.
They take a slightly different route,requiring funders to register as managed
(17:11):
investment schemes.
Now, that might sound like a bureaucraticheadache, but the key difference is that
their system emphasizes disclosureswithout making them, you know, so
invasive that funders feel exposed or atrisk.
Courts can tweak funding agreements ifthey seem unfair, but there's no
(17:35):
equivalent to Georgia's joint and severalliability provision-thankfully.Now, let's
circle back to the United States.
States like Wisconsin and Maine havetaken a more moderate approach.
Wisconsin, for example, mandatesstraightforward disclosures between
funded parties and claimants, withoutbroadcasting every contract detail to
(17:59):
competitors or the public.
And Maine?
They cap funding rates for consumerlitigation but stop short of imposing
punitive liabilities or unnecessarilyrigid requirements.
These state-level models show it'sentirely possible to protect litigants
without crushing the funding marketaltogether.
So, what's the lesson here?
(18:20):
Regulation doesn't have to be, let's say,'one-size-fits-all.' There are smarter,
more targeted ways to provide oversightwithout dismantling a system that's,
frankly, indispensable for many peopletrying to access justice.Alright, so
let's take a moment and think about thereal-world effects of Senate Bill 69.
And when I say "real-world," I mean thepeople who bear the brunt of these
(18:46):
changes-individuals, small businesses,and those tied up in the most challenging
lawsuits like mass tort cases.
Because, let's face it, these aren't justtweaks to the system-we're talking about
barriers that could reshape the legallandscape entirely.
Let's start with individuals.
(19:08):
For them, litigation funding is often theonly lifeline they have to file claims
against big corporations.
Imagine being harmed by, say, a defectiveproduct or environmental contamination.
Cases like that require high-end expertanalysis, mountains of documentation, and
(19:31):
court costs that rack up faster than aNew York cab meter.
Without funding?
Well, a lot of claims just die beforethey're even filed.
And the corporations responsible?
They skate by without ever being heldaccountable.And let's not overlook small
businesses-they're equally at risk here.
(19:54):
Picture a family-owned company that'sbeen wronged by a multi-billion-dollar
corporation.
The legal costs alone could bankrupt thembefore the case even gets to court.
Litigation funding is how these smallerplayers level the field-or at least try
to.
But this bill?
(20:14):
It slashes the funding opportunities to afraction of what they are now, leaving
small businesses with, frankly, no goodoptions.
As far as David versus Goliath battlesgo, it's like taking David's slingshot
away and handing Goliath a shield on topof it.And then there's the mess that is
(20:34):
mass tort litigation.
Let's say we're dealing with victims oftoxic spills or faulty medical devices.
These lawsuits?
They're not cheap to run.
We're talking millions-experts,discovery, years of trial prep.
Without funding, you basically shut thedoor on claims like this altogether.
It's harsh, but it's the truth (20:55):
fewer funders means fewer cases, period.
And the corporations who stand on theother side of these lawsuits?
They get to keep dodging liability, whilethe victims are left holding the bag.
Now, the real irony here is that allthese changes are supposedly about
(21:19):
consumer protection.
But the consumers they're claiming toprotect?
They're the ones losing out.
Senate Bill 69 places access to justicefurther out of reach for the very people
who need it most, all while making iteasier for larger, well-funded players to
(21:40):
dominate.
You've got to wonder if "protection" isreally what's at play here.Alright, let's
put Senate Bill 69 under the microscopeand ask the hard question: who actually
benefits from this, and who gets left inthe dust?
Because, let's face it, most legislationhas winners and losers, and this bill?
(22:01):
No exception.
Let's start with the winners, shall we?
Big corporations-they've got to begrinning ear to ear right now.
Why?
Well, fewer funding options mean fewerfunded plaintiffs.
So, if you're a corporate defendant withdeep pockets?
This is basically a dream come true.
(22:23):
You can drag cases out, pile up legalcosts, and outlast opponents who can no
longer afford to keep going.
It's like giving Goliath better armorwhile taking stones away from David.
Not exactly a fair fight, is it?And let'snot forget the insurance companies.
For them, this is a golden ticket.
(22:44):
The fewer claims that make it to court,the fewer payouts they have to make.
Honestly, predictable wins for them, butat what cost?
You've got to wonder if their bottom lineis worth leaving legitimate claims on the
cutting-room floor.
Now, who's on the losing side?
Well, where do I start?
(23:05):
Individuals with legitimate claimsagainst big corporations?
They're struggling without financialbacking.
Small businesses trying to stand upagainst unfair practices?
They're, well, totally outmatched.
And independent inventors?
Oh boy, for them, this bill is like anightmare.Take inventors and startups,
(23:25):
for example.
Many of them rely on litigation fundingto protect their intellectual property.
Without it, enforcing their patentsbecomes borderline impossible.
And corporate infringers know this.
Some of them practice what's called"efficient infringement," which is a
fancy way of saying they ignore the rulesbecause they know most people can't
(23:48):
afford to fight back.
It's...
it's demoralizing, really.
And small businesses?
Same story.
Without funding, how does a localentrepreneur even put up a fight against
a giant corporation with an entire legaldepartment on standby?
Answer (24:07):
they usually don't.
It's a cold, hard truth that this bill,if passed, could end a lot of legal
battles before they even start.Thenthere's mass tort cases-the really big
ones involving environmental damage,defective products, systemic negligence.
These lawsuits cost millions to seethrough.
(24:28):
Without funders stepping up, well, mostof them never get off the ground.
And the victims?
They're left staring at an insurmountablewall while the companies responsible walk
away unscathed.
It's...
yeah, it's a bleak picture.Alright, let'sswitch gears a bit and talk solutions,
(24:51):
because we've spent a lot of timedissecting what's wrong with Senate Bill
69.
Now, the question is, what could a morebalanced approach actually look like?
How do we address legitimate concernswithout, you know, setting the whole
system on fire?
First up, disclosure and transparency.
Now, don't get me wrong, transparency canabsolutely serve the public good, but it
(25:14):
needs to be, well, reasonable-targeted.
The current bill's demand for funders tospill every operational secret into
public records?
That's not transparency; that's a recipefor stifling competition.
Instead, why not focus on clear,client-focused disclosures?
(25:34):
Things like explaining the terms offunding, projected costs, and potential
recovery scenarios.
Add an attorney sign-off to ensure allparties fully understand the deal, and
boom, you've got meaningful transparencywithout the overreach.Next, consumer
protections.
Look, no one wants predatorypractices-nobody-but let's not pretend
(25:57):
those require a regulatory sledgehammer.
Reasonable rate caps tailored toindividual plaintiffs might make sense.
But here's the kicker (26:04):
those caps need to leave room for funders to still find
these cases worth pursuing, especiallythe complex ones.
Striking that balance is tough, sure, butit's possible if we avoid lumping all
funding contracts into one rigidframework.
(26:25):
Nuance, people, nuance.
And what about operational requirements?
Right now, the bill's demands are soextreme, small funders might as well just
close up shop.
Instead, why not take a more targetedapproach-say, capital adequacy rules that
(26:45):
ensure funders have the resources to backtheir commitments without suffocating
smaller players?
You don't need an industry to be entirelydominated by a few massive funders to
maintain oversight.
Smaller, precise adjustments could fixthis part without gutting the
market.Look, the point is that none ofthese measures have to be all-or-nothing.
(27:11):
If we focus on designing laws thatgenuinely seek improvements-not
headline-ready overcorrections-we canaddress concerns without derailing access
to justice for individuals, smallbusinesses, and independent inventors.
Regulation doesn't have to meanextinction.Alright, so let's tackle the
(27:34):
elephant in the room-implementation.
Because, let's be honest, as it stands,the framework in Senate Bill 69 is not
just overly ambitious-it's, well, almostself-sabotaging.
But the good news?
We've got room to pivot here, startingwith those registration requirements.
Right now, funders have to submit whatbasically amounts to a corporate history
(27:56):
lesson-every little operational detail,including ownership thresholds as low as
five percent-and, oh yeah, all of thatbecomes public.
Now, while transparency matters, there'sa fine line between oversight and airing
out proprietary secrets for competitorsto ogle.
One simple fix?
Keep sensitive information-key financialdata, funder strategies-confidential.
(28:21):
It still affords oversight without makingfunders feel like they're writing their
competition a playbook.Next up, thoseliability provisions.
Joint and several liability?
It's-how do I put this delicately-anabsolute minefield.
Holding funders entirely responsible forbehavior they had no part in?
(28:42):
That's not regulation; it's a recipe forretreat.
Instead, liability needs clear boundaries.
For example, funders could be heldproportionally responsible for actual
misconduct they're tied to, but not forevery misstep the plaintiffs take.
It's about matching the responsibility tothe role-not throwing funders under an
(29:07):
entire legal bus for being on theperiphery of a case.
Ah, and then there's discovery.
Right now, the bill wants to make allfunding agreements fair game in court,
regardless of relevance.
Let me just say, that kind of blanketrule is asking for trouble.
Instead, why not let judges evaluatefunding agreements
(29:30):
in-camera-privately-when there's anactual issue at stake?
It's straightforward and ensuresdiscovery stays focused, without turning
litigation into a fishingexpedition.Alright, let's face it, Senate
(29:51):
Bill 69?
As it stands, it's less about protectingconsumers and more about slamming the
door on everyday people who need accessto justice.
And for those of us paying attention,it's clear this bill isn't a done deal
yet-there's still room to act.
So, if we're serious about avoiding thefallout, let's break down how we can
(30:14):
actually make a difference here.
First, direct legislative outreach.
Sounds simple, but it's incrediblyeffective.
Call your state representatives-emailthem, even.
They need to hear from real constituents,people who actually understand how this
bill could play out in the real world.
Like, let's be clear (30:36):
lawmakers don't always know the full impact of what
they're voting on.
Hearing specific stories-successesbrought about by litigation funding-well,
that's the kind of thing that can reallychange the narrative.Now, let's talk
about professional associations.
Whether it's the Georgia Trial Lawyers orthe Small Business Alliance, these groups
(31:00):
carry weight.
Their influence can amplify thisconversation in ways that one-off voices
simply can't.
So, if you're part of an association,now's the time to rally them.
Their advocacy-backed by real-worldexamples-can push back against the more
(31:21):
extreme measures of this bill, you know?
And don't sleep on public comments ortestimony.
When this bill heads to committeehearings, there's usually an open floor
for input-written comments or even livetestimony, if you're up for it.
I mean, the truth is, sharing how thislegislation impacts actual people has a
(31:44):
way of cutting through all the legaljargon.
Keep it direct, make it emotional if youhave to-whatever it takes to get their
attention.Finally-and this iskey-coalition building.
You've got small business owners,inventors, consumer advocates, even legal
professionals, all affected by differentpieces of this bill.
(32:07):
By organizing across these groups, it'spossible to bring a unified front to the
table.
And trust me, lawmakers notice when adiverse coalition comes knocking.
That's how you build momentum.
That's how you make it impossible forthem to ignore the real-world impact of
this legislation.
(32:28):
Look, at the end of the day, this isn'tabout stopping all regulation-it's about
pushing for balance.
Regulation that doesn't destroy crucialresources like litigation funding.
Because the reality is, taking this toolaway doesn't just hurt plaintiffs, it
tips the entire system further in favorof those who already hold all the power.
(32:54):
And, honestly, I think we're all ready tosee a justice system that's just a little
more equitable, don't you?On that note,we'll leave it here for today.
Thanks for tuning in to The AI LawPodcast.
Until next time, take care, stayinformed, and don't underestimate the
power of your voice.
(33:14):
Change happens when people speak up-solet's keep the balance in play.
Thanks for joining me today!
Please reach out with any questions,comments, or discussion ideas!
Be well!
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