In a significant move toward transparency and fairness, Louisiana may soon join other states in addressing the impact of third-party litigation finance arrangements (TPLAs) on civil litigation. The recently approved Litigation Financing Disclosure and Security Protection Act (SB 196) aims to shed light on non-party participants who influence lawsuits and to allow defendants to explore these agreements and arrangements12.
What Does HB336 Entail?
HB336, also known as the Litigation Financing Disclosure and Security Protection Act, introduces critical changes to Louisiana’s legal landscape. Here are the key provisions:
- Mandatory Disclosure: The bill requires parties involved in civil litigation to automatically disclose any TPLAs. This disclosure extends beyond the typical attorney-client relationship and encompasses any agreement where compensation is contingent on the proceeds of the civil action.
- Clear Playing Field: By revealing the presence of third-party participants, HB336 ensures a level playing field. When someone else—beyond the legal representative—has a stake in the outcome, transparency becomes paramount.
- Redaction of Specific Details: While parties must disclose the existence of TPLAs, the bill allows for redaction of specific financial details. The exact amount need not be revealed, preserving confidentiality while maintaining transparency.
Why Is This Important?
- Transparency: HB336 prioritizes transparency. By disclosing TPLAs, litigants, attorneys, and insurers gain insight into who stands to benefit from the lawsuit. This knowledge helps maintain integrity within the civil justice system.
- Mitigating Bias: Defendants can now inquire into the contents of TPLAs and even depose the outside parties who provided funding. This enables defense attorneys to substantiate bias and failure-to-mitigate defenses that often arise with TPLAs.
- Industry Impact: TPLAs have become a billion-dollar industry in the United States. Originating in Australia and spreading to Europe, this financing model has implications for critical industries, court resources, and the sanctity of the client-attorney relationship.
Real-World Examples
Across the country, similar legislation has been enacted to address TPLAs. Louisiana’s HB336 aligns with this trend, emphasizing the need to balance openness with confidentiality. As the bill awaits Governor Jeff Landry’s’ signature, it underscores the state’s commitment to a fair and transparent judicial climate1.
In summary, HB336 represents a pivotal step toward ensuring that all stakeholders—plaintiffs, defendants, and the public—understand the dynamics of civil litigation. By shining a light on third-party involvement, Louisiana aims to uphold justice while safeguarding the interests of its citizens.