New Bill Targets Hidden Litigation Funding to Curb Legal System Abuse

A bipartisan push to expose shadowy lawsuit funding could save insurers billions. Will judges finally see who’s bankrolling legal battles?

, and Administrator

2026 January 14 . 5:35 AM

1 min read

The image shows a paper with a few papers attached to it, each with text written on them. The text... — The image shows a paper with a few papers attached to it, each with text written on them. The text reads "Brisker & Shellard's Patent Safety Match".

New Bill Targets Hidden Litigation Funding to Curb Legal System Abuse

The American Property Casualty Insurance Association (APCIA) has backed new legislation aimed at curbing legal system abuse. The bill, known as the Protecting Third Party Litigation Funding From Abuse Act, seeks to bring greater transparency to third-party funding in lawsuits. Industry leaders warn that unchecked litigation funding could cost insurers up to $50 billion over the next five years.

The proposed act, introduced by Rep. Darrell Issa, R-Calif., will face discussion in a House Judiciary Committee markup on January 13. If passed, it would require all third-party litigation funding contracts to be submitted to the court. This measure aims to make funding arrangements more visible to judges and opposing parties.

APCIA has long campaigned against legal system abuse, including the rise of third-party litigation funding. The group previously supported Issa’s Litigation Transparency Act of 2025 (HR 1109). Now, they are working with the congressman and other stakeholders to push for stricter disclosure rules. The insurance industry blames third-party funding for driving up litigation costs. According to APCIA estimates, these investments could impose $50 billion in direct and indirect expenses on insurers within five years. The association argues that greater transparency will help prevent excessive claims and unfair settlements.

The legislation marks APCIA’s latest effort to tackle legal system abuse in 2026. If approved, the act would force funding agreements into the open, giving courts more oversight. The outcome could reshape how litigation funding operates in future lawsuits.