Georgia Cracks Down on Litigation Funding: What This Means for Personal Injury Cases

Georgia Cracks Down on Litigation Funding: What This Means for Personal Injury Cases

The landscape of personal injury litigation in Georgia is undergoing a significant transformation. With the enactment of Senate Bill 69 (SB 69), also known as the “Georgia Courts Access and Consumer Protection Act,” Georgia has joined a growing number of states in regulating third-party litigation funding (TPLF). This move introduces both opportunities and challenges for plaintiffs, attorneys, and the litigation finance industry. Understanding these changes is crucial for anyone involved in personal injury cases in Georgia.

What is Litigation Funding?

Litigation funding, also known as third-party litigation financing (TPLF) or legal funding, involves an entity that is not a party to the lawsuit providing funds to a plaintiff or a law firm in exchange for a portion of the settlement or judgment. This funding can be used to cover various expenses, including attorney fees, court costs, expert witness fees, and even the plaintiff’s living expenses while the case is ongoing.

Key Provisions of Georgia’s SB 69

SB 69 introduces several key regulations that impact litigation funding in Georgia:

  • Registration Requirement: Litigation financiers operating in Georgia must register with the Department of Banking and Finance, disclosing ownership and any criminal convictions. The majority of the provisions in the bill, including the registration requirement, went into effect on January 1, 2026.
  • Discovery of Litigation Funding Agreements: The existence, terms, and conditions of litigation funding agreements involving $25,000 or more are now subject to discovery in civil actions. This allows the defense to assess whether litigation or settlement decisions are being driven by a third party rather than by the plaintiff or counsel.
  • Restrictions on Litigation Financiers: Funders are prohibited from directing or making decisions regarding legal representation, expert witnesses, litigation strategy, or settlement. They also cannot receive more than the plaintiff’s net recovery after fees and costs, pay or accept referral fees, engage in false advertising, or require the use of specific service providers.
  • Liability for Frivolous Litigation: A litigation financier that agrees to provide $25,000 or more in funding may be jointly and severally liable for any award or order imposing costs or monetary sanctions for frivolous litigation.
  • Mandatory Disclosures: Litigation funding contracts must include clear disclosures regarding cancellation rights, the funder’s lack of control over the case, and the consumer’s right to change legal representatives.
  • Restrictions on Foreign Influence: SB 69 prohibits foreign adversaries from investing in litigation. No one affiliated with any foreign government, foreign adversary, foreign person, foreign principal or sovereign wealth fund may register as a litigation financier or enter into a litigation financing agreement in Georgia.

Impact on Personal Injury Cases

The changes brought about by SB 69 have several implications for personal injury cases in Georgia:

  • Increased Transparency: The discoverability of litigation funding agreements increases transparency in the litigation process. This allows defendants to understand the financial motivations behind a lawsuit and assess whether settlement decisions are being influenced by a third party.
  • Potential for Reduced Settlement Amounts: With increased transparency, defendants may be less willing to offer high settlement amounts, knowing that the plaintiff has financial backing and may be less inclined to settle reasonably.
  • Greater Scrutiny of Claims: The potential liability for frivolous litigation may lead litigation funders to be more selective in the cases they choose to fund, potentially discouraging weak or unsubstantiated claims.
  • Protection for Plaintiffs: The restrictions on funder influence and the mandatory disclosure requirements are designed to protect plaintiffs from potentially predatory lending practices and ensure they maintain control over their cases.
  • Impact on Access to Justice: Some argue that the regulations imposed by SB 69 could stifle access to justice for individuals who may not have the financial means to pursue their claims without third-party funding.

Navigating the New Landscape

For those involved in personal injury cases in Georgia, it’s essential to understand the implications of SB 69 and how it may affect their rights and options. Here’s some advice:

  • For Plaintiffs:
    • Seek Legal Advice: Consult with an experienced personal injury attorney who can explain your rights and options under the new law.
    • Understand the Terms of Any Funding Agreement: Carefully review the terms of any litigation funding agreement before signing it, and ensure you understand your rights and obligations.
    • Maintain Control of Your Case: Remember that you have the right to make all decisions regarding your case, including settlement decisions. Do not allow the litigation funder to unduly influence your decisions.
  • For Attorneys:
    • Stay Informed: Stay up-to-date on the latest developments in litigation funding law and how it may affect your clients.
    • Advise Your Clients: Provide your clients with clear and accurate advice about the risks and benefits of litigation funding.
    • Ensure Compliance: Ensure that any litigation funding agreements you enter into comply with the requirements of SB 69.

Conclusion

Georgia’s crackdown on litigation funding represents a significant shift in the legal landscape for personal injury cases. While the new regulations aim to increase transparency and protect consumers, they also introduce new challenges for plaintiffs, attorneys, and the litigation finance industry. By understanding the key provisions of SB 69 and seeking expert legal advice, individuals involved in personal injury cases can navigate this evolving landscape and protect their rights.