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HD 3982

An Act relative to litigation financing

194th Legislature (2025-2026) Introduced by Danielle Gregoire

Massachusetts bill establishing licensing, disclosure, and consumer protection standards for third-party litigation financing arrangements.

Senate concurred
0
WeVote Research Nonpartisan
Bill Summary · HD 3982

Legislative bill overview

HD 3982 proposes regulations governing litigation financing arrangements, where third-party funders provide capital to plaintiffs in exchange for a percentage of settlement or judgment proceeds. The bill establishes licensing requirements, disclosure standards, and consumer protections for these financial relationships that have become increasingly common in civil litigation.

Why is this important

Litigation financing has grown substantially as an alternative funding source for plaintiffs pursuing legal claims, but the industry currently operates with minimal regulation in Massachusetts. This creates potential risks including predatory terms, lack of transparency about costs, and conflicts of interest that could influence litigation strategy. Clear regulatory standards could protect plaintiffs while providing industry clarity.

Potential points of contention

  • Access to justice vs. market concerns: Supporters argue regulation enables plaintiffs without resources to pursue legitimate claims; opponents worry licensing requirements could restrict capital availability or increase costs for vulnerable litigants
  • Fee structure limitations: Defining acceptable percentage rates and terms is contentious—caps may reduce funder participation while loose rules could enable exploitative agreements
  • Disclosure and transparency scope: Disputes likely over what information must be disclosed to courts, opposing parties, and insurers, and whether transparency requirements improperly expose settlement negotiations
  • Regulatory burden: Small funders may face compliance costs that consolidate the market toward larger players, raising competition concerns

Compiled from official sources — confirm details with the bill’s official record.

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