A New Disclosure Requirement for Ohio Lawsuits
Earlier this summer, Governor DeWine signed House Bill 105 into law, creating new transparency requirements around third-party litigation funding in Ohio civil cases. If you’ve never heard the term before, third-party litigation funding refers to outside investors, often specialized finance companies, who pay a plaintiff’s legal costs or living expenses in exchange for a cut of any eventual settlement or judgment. HB 105 doesn’t ban this practice, but it does require it to be disclosed, a change lawmakers say brings much-needed accountability to a growing but largely unregulated corner of the legal industry.
What Third-Party Litigation Funding Actually Is
Litigation funding arrangements have become increasingly common in personal injury and other civil cases over the past decade. A plaintiff who is out of work after an accident, and facing mounting medical bills, may take a cash advance from a funding company to cover rent or bills while the case proceeds. In exchange, the funder is repaid, often with substantial interest or a share of the recovery, once the case resolves. Until now, these arrangements were rarely disclosed to the court, the opposing party, or even always fully understood by the plaintiff signing the agreement.
What HB 105 Requires
The new law requires parties involved in litigation funding arrangements to disclose the existence of the funding agreement during discovery in a civil case.
- Requires disclosure of third-party funding agreements to the court and opposing parties
- Aims to reveal potential conflicts of interest between funders and the litigation strategy
- Intended to prevent funders from improperly controlling settlement decisions
- Part of a broader national trend of states adopting similar transparency measures
Why This Matters for Injury Victims
For everyday accident victims, the practical effect of HB 105 is more clarity, not less access to funding. The law doesn’t prevent you from seeking a litigation advance if you need one to stay afloat while your case is pending. What it does is ensure that if a funding company has a financial stake in the outcome of your case, that relationship is visible to the court rather than hidden. Supporters argue this protects plaintiffs from funders who might otherwise pressure them to reject a fair settlement in hopes of a bigger payout, or push cases toward outcomes that benefit the funder more than the injured person.
What to Watch Out for Before Signing a Funding Agreement
If you’re considering a litigation funding arrangement while your injury case is pending, read the terms carefully. These agreements can carry very high effective interest rates, and some structure repayment in ways that eat into a much larger share of your eventual settlement than you might expect. Under the new disclosure requirements, your attorney will now have a clearer picture of any funding arrangement’s terms as your case moves forward, which can help ensure the arrangement doesn’t compromise your interests.
Talk to Your Attorney Before You Sign
Before entering into any litigation funding agreement, talk to your attorney first. A funding arrangement that seems like a lifeline in the moment can end up costing you far more than anticipated once your case resolves. Our team can help you evaluate whether funding makes sense for your situation and, if it does, make sure the agreement is properly disclosed and doesn’t undermine your case.
