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SD 2170

An Act to provide transparency in third party litigation financing

194th Legislature (2025-2026) Introduced by Nick Collins

Massachusetts requires third-party litigation financiers to register and disclose funding involvement in lawsuits, establishing state oversight of non-traditional litigation investment arrangements.

House concurred
0
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Bill Summary · SD 2170

Legislative bill overview

SD 2170 requires third-party litigation financiers to disclose their involvement in lawsuits and register with state authorities, along with providing transparency about their funding terms and agreements. The bill establishes oversight mechanisms and reporting requirements for non-traditional litigation funding arrangements where external parties invest in pending lawsuits in exchange for a percentage of any settlement or judgment.

Why is this important

Third-party litigation financing has grown substantially but operates largely in the shadows, potentially influencing case strategy, settlement decisions, and access to justice in ways the public cannot see. This bill aims to ensure plaintiffs, defendants, judges, and the public understand who is financially incentivizing lawsuits, which could affect everything from frivolous litigation rates to the cost of doing business and insurance premiums.

Potential points of contention

  • Business impact: Litigation financiers argue transparency requirements could reduce their willingness to fund meritorious cases for lower-income plaintiffs who lack resources, potentially limiting access to justice for those who need it most
  • Competitive concerns: Disclosure requirements could reveal sensitive financial strategies and deal terms to competitors, potentially discouraging legitimate litigation funding companies from operating in Massachusetts
  • Scope ambiguity: The bill's definition of "third party litigation financing" may be unclear regarding which funding arrangements must comply, creating compliance uncertainty for lenders, attorneys, and litigation funders

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

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