Springfield, IL – State Representative Dan Ugaste (R-Geneva) recently filed legislation to regulate commercial lawsuit lending in Illinois to help ensure fairness in our court system. The bill, HB 5244, creates the Litigation Financing Transparency Act.
Commercial third-party litigation funding remains largely undisclosed and unregulated in Illinois, allowing unknown parties and entities to influence litigation, drive up costs, and potentially encourage meritless claims. In addition, the lack of transparency has created vulnerabilities in the justice system, as the potential exists for foreign-backed investors to use Illinois courts as a financial tool.
“This bill does not ban litigation funding, but it creates basic rules to ensure outside funders aren’t steering cases, pressuring settlements, or turning the courts into a business opportunity,” stated Rep. Ugaste. “This legislation limits how these funders can be paid so that the injured party is ensured to receive a meaningful share of the award and the majority does not go to the investor. It also blocks foreign funding, so Illinois courts are not used as a financial tool by outside interests.
“Other states are acting, and it’s time Illinois does as well,” Rep. Ugaste continued. “If you are going to profit from lawsuits filed in Illinois, you shouldn’t be allowed to hide in the shadows.”