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Minutes for HB2510 - Committee on Judiciary
Short Title
Authorizing a party to obtain discovery of the existence and content of an agreement for third-party funding of litigation under the code of civil procedure.
Minutes Content for Wed, Jan 31, 2024
Chairperson Humphries opened the hearing on HB2510. Natalie Scott provided an explanation of the brief and stood for questions. (Attachment 1)
Proponent
Eric Stafford stated the U.S. Chamber Institute for Legal Reform (ILR) first published information on third party litigation funding (TPLF) back in 2009, but this practice was pretty limited to the country of Australia. However, a new niche market of hedge funds has been created for the purpose of investing in litigation in the outcome of lawsuits betting on their success and a financial return on their investment. There are ethical questions that arise from this practice. Mr. Stafford stood for questions. (Attachment 2)
Mike O'Neal stated they understand that the purpose of this legislation is to allow discovery of 3rd-party agreements the companies or industries that actually fund the litigation and pay for the associated litigation costs enter in to with litigants. An earlier version of this proposal was broad enough to apply to our lending product. They appreciate the fact that the Kansas Chamber was willing to work with them on language that will accomplish their intent while not impacting their non-litigation funding consumer product. Mr. O'Neal stood for questions. (Attachment 3)
Mark Behrens stated large-scale TPLF is different from consumer lawsuit lending. Those arrangements are between a funder and an individual, such as the plaintiff in a personal injury case. In consumer lawsuit lending situations, “the funder provides a relatively small amount (typically under $10,000) to the plaintiff, who uses it for living expenses.” His testimony today focused on large scale TPLF because this particular financial product is fundamentally changing the civil justice environment in America. TPLF should be about providing funding to help with household and living expenses. Mr. Behrens stood for questions. (Attachment 4)
Written Only Testimony
- Ryan Meyer, President, Kansas Association of Defense (Attachment 5)
- Randy Stookey, Kansas Grain & Feed and Kansas Ag. Retailers Association (Attachment 6)
- Marlee Carpenter on behalf of Kansas Association of Property and Casualty Insurance (Attachment 7)
- Scott Kibbe, American Property Casualty Insurance Company (Attachment 8)
- Ross Lien, Regional Vice President--Midwest, National Association of Mutual Insurance Companies (Attachment 9)
- Rachelle Colombo, Kansas Medical Society (Attachment 10)
- Beth Smoller, Kansas Association of Insurance Agents (Attachment 11)
Neutral
Daniel E. Burrows stated HB2510 would allow certain third-party agreements for financing litigation to be obtained through discovery. This forced disclosure could open the door to threats, intimidation, and harassment and ultimately reduce donor willingness to support charitable causes and public-interest organizations. Nonetheless, they still believes that the bill, as written, could require the disclosure of funding from nonprofits in certain ideological, political, or other public-interest litigation. In their role at the Office of the Attorney General, they take the protection of citizens' privacy and their right to donate to charitable causes anonymously very seriously. Preserving this crucial right to association and speech is vital, as without it, certain causes, particularly conservative ones, may face heightened scrutiny. Mr. Burrows stood for questions. (Attachment 12)
Opponent
Mr. Gary Barnett gave his opponent testimony because he was at today's hearing virtually. He stated in many instances, commercial legal finance gives smaller companies the resources to pursue meritorious claims. Many funded commercial matters are “David vs. Goliath” in nature, in which a smaller company is engaged in litigation against a larger well-resourced company. Without access to this financing, many meritorious claims would not go forward. Often right and just results, would not have been possible without access to legal finance. Commercial legal finance is beneficial to businesses from startups to Fortune 100 companies. It allows them to keep capital in their businesses, allowing them to grow and innovate. Commercial legal finance enables parties with meritorious claims to access our justice system, which in turn ensures courts will hear the best legal arguments and arrive at the right legal conclusions. The result is a fairer and more just legal system. Mr. Barnett thanked the membership for allowing him participate today. Mr. Barnett was available for questions. (Attachment 13)
Chairperson Humphries paused the hearing on HB2510 and it will be continued tomorrow with the balance of the opponent testimony.
