A bill to provide more transparency about third-party litigation financing in Louisiana was vetoed this week by Gov. John Bel Edwards, who argued that such funding agreements help to “level the playing field” between individual plaintiffs and defendant companies.
Edwards vetoed Senate Bill 196, authored by Sen. Barrow Peacock (R-Bossier City), on Thursday. In his veto message, the governor said, “The bill only requires plaintiffs to unilaterally disclose their commercial legal financing arrangements.”
The bill, however, does not contain the term “plaintiff,” suggesting that it applies equally to all parties in civil lawsuits. SB 196 represents a “pretense” for large corporations or insurance companies to gain the upper hand in such lawsuits, Edwards said in the veto letter.
Critics of third-party litigation financing (TPLF) say such funding agreements allow hedge funds or other investors to profit from civil litigation and gain undue influence over key lawsuit decisions. Under the TPLF process, financiers and wealth funds agree to fund the litigation in return for a percentage of any settlement obtained.
SB 196 would have required disclosure of the existence of such agreements to all parties in civil lawsuits.
“This bill would give large corporations and insurance companies a tactical advantage by allowing them to exploit their newfound knowledge of an individual or small business's litigation budget,” Edwards’ veto message says.
But the version of the bill that passed the Legislature allows for such funding amounts to be redacted in disclosed agreements.
The Governor’s Office did not respond to a request for comment about the veto letter on Friday.
Deputy chief of staff of communications for the governor, Eric Holl, said in an email:
"[B]efore we even consider offering comment, do you intend to disclose as a note in your story that your outlet is operated by the US Chamber of Commerce, a known supporter of legislation across the country to limit the rights of plaintiffs and injured parties?"
Lana Venable, executive director of Louisiana Lawsuit Abuse Watch, said she was disappointed by the veto but would continue to fight for more transparency in the state’s civil justice system.
“This commonsense legislation sought to address the growing issue of … (TPLF), allowing hedge funds, sovereign/foreign wealth funds and other financiers to invest in lawsuits in exchange for a percentage of any settlement or judgment,” Venable said in an email to the Louisiana Record. “Because funders are not required to disclose agreements, no one knows how much control or influence they have regarding strategic litigation decisions, like whether to settle or take a case to trial.”
She urged Louisianans to cast their votes for those candidates who favor reforming the legal system so that businesses are not unfairly penalized.
“Louisiana has continually been named a Judicial Hellhole (by the American Tort Reform Association), with excessive tort litigation resulting in nearly $279 million in fiscal impact to the state and nearly 50,000 lost jobs,” Venable said.
It was unclear if the state lawmakers would attempt to override Edwards’ veto.
(Editor's note: The Louisiana Record is owned by the U.S. Chamber of Commerce).