Litigation Funding Laws by State: Triple-I Counts 20-Plus as Federal Rulemakers Weigh Disclosure

More than 20 states now have litigation funding laws on the books, according to an issues brief the Insurance Information Institute (Triple-I) released on Oct. 20, 2026, and they range from North Carolina's outright ban, backed by civil penalties of up to $50,000 per violation, to narrower statutes that only require disclosure or bar foreign money. The state-by-state map matters right now because federal rulemakers met the next day, Oct. 21, with a uniform disclosure rule on the agenda, and because personal injury firms, mass tort lenders and mass-arbitration funders now face a different set of rules in almost every state they file in.

The Triple-I brief, titled "State of the Issue: Third-Party Litigation Funding," is available only to members. The public account comes from the institute's Business Wire release and from trade coverage of it. Its central points are a count of state enactments, a list of the 2026 class (Ohio, Mississippi, Tennessee and Utah), the observation that Congress has not moved, and a cost estimate that insurers have used for several years. This article sets out the litigation funding laws by state as they stand in late October 2026, tests the brief's claims against the statutes and court orders that can be verified, and explains what the patchwork means for plaintiffs' counsel, defendants and the funders who sit between them.

What the Triple-I brief says, and why the timing matters

The release makes four claims. First, "more than 20 states" have passed laws on disclosure of Third-Party Litigation Funding. Second, North Carolina has gone furthest: its HB 315 "bans litigation investment outright and authorizes civil penalties of up to $50,000 per violation," which Triple-I calls a national first. Third, Ohio (HB 105), Mississippi (SB 2747), Tennessee (HB 2108) and Utah (HB 280) passed laws this year that require funders to register or disclose, restrict funding from foreign entities, or limit funders' control over litigation. Fourth, federal action has stalled. The Litigation Funding Transparency Act was introduced in February and has not advanced, and a petition for a uniform federal disclosure standard was set for possible discussion at the Advisory Committee on Civil Rules meeting on Oct. 21.

Triple-I chief executive Sean Kevelighan framed the brief in plain advocacy terms: "Litigation funding has operated in the shadows for too long." Coverage also quotes him calling transparency "the logical next step." The release notes that Florida, the market insurers watch most closely, has not passed a funding statute. A Florida bill, the Litigation Investment Safeguards and Transparency Act, died on the calendar on March 13, 2026.

The timing is deliberate. The brief went out the day before the federal rules committee met, and the committee's agenda book listed third-party litigation funding as a discussion item. The brief is an industry position paper, not neutral research. Its state count is still consistent with other tallies. Insurance Journal, citing the U.S. Chamber of Commerce, reported in August that about 20 states have funding restrictions and that 13 of them acted within the previous two years.

Which states regulate third-party litigation funding in 2026?

Under the broad definition Triple-I uses (any statute or court rule on funder disclosure, registration, control or foreign money), at least 17 states can be identified from statutes and court materials reported publicly. They fall into four overlapping models: prohibition, mandatory disclosure, registration with a state agency, and foreign-funding bans. The table below lists the enactments that are current as of October 2026 and can be verified, in reverse chronological order.

State	Measure	Year	Main mechanism	Notable detail
California	AB 2305 (Ch. 393, Stats. 2026)	2026	Funder control is unauthorized practice of law	$10,000 per violation or treble damages; contracts on or after Jan. 1, 2027
Ohio	Sub. HB 105	2026	AG registration; foreign ban; automatic production	Effective Oct. 6, 2026; agreement goes to parties and insurers without a discovery request
North Carolina	HB 315 (S.L. 2026-14)	2026	Outright prohibition	Void agreements; AG penalties up to $50,000 per violation; treble damages; reaches arbitration
Tennessee	SB 2101 / HB 2108 (Pub. Ch. 1005)	2026	Disclosure to court and parties; foreign-adversary bar	Signed May 26, 2026; disclosure within 14 days of the initial pleading, per practitioner commentary
Mississippi	SB 2747	2026	Foreign-funder disclosure to AG	Written disclosure within 30 days after the agreement is executed
Utah	HB 280	2026	Registration with Division of Consumer Protection	Signed March 18; effective May 6, 2026; consumer rescission period extended from 5 to 10 days
Georgia	SB 69	2025 (eff. Jan. 1, 2026)	Registration with Department of Banking and Finance	NMLS registration; foreign-adversary bar; agreements discoverable; no funder control
Arizona	SB 1215 and Ariz. R. Civ. P. 8(j)	2025 (eff. Dec. 31, 2025 / Jan. 1, 2026)	Foreign-entity bar; court-rule certificate	First state supreme court rule on funding disclosure
Kansas	Sub. SB 54	2025	Discovery rule (K.S.A. 60-226)	Foreign "country of concern" disclosure; reports to Judicial Council
Oklahoma	HB 2619	2025	Foreign-funding affidavit	Agreements discoverable on request
Colorado	HB 25-1329	2025	Foreign-funder disclosure to AG	Non-compliant agreements void
Louisiana	SB 355	2024	Foreign-funding limits; no funder control	State disclosure window of 30 days
Indiana	HB 1160	2024	Foreign restrictions; limits funder influence	Agreements discoverable
West Virginia	SB 850	2024	Extends consumer-funding rules to commercial funding	18% annual fee cap on consumer funding retained
Montana	SB 269	2023	Disclosure in any civil action	Funders barred from directing strategy or settlement
Wisconsin	Disclosure statute	2018	Automatic disclosure	First state to require it

The count reaches "more than 20" once older consumer-lending statutes in other states are included. Those statutes regulate pre-settlement advances to individual plaintiffs, mainly through rate caps, contract terms and cancellation rights. Commercial portfolio funding is a separate category. That definitional choice drives most of the disagreement among trackers, and it matters for practitioners. A consumer pre-settlement advance to a car-crash client and a $50 million portfolio facility to a mass tort firm are regulated in different ways, by different statutes, in most states.

Which state banned litigation funding?

North Carolina is the only state that has banned litigation funding outright. Governor Josh Stein signed HB 315, the Prohibit Litigation Investments Act, on June 22, 2026, and it was codified as Session Law 2026-14. The bill passed 112-0 in the House and 45-1 in the Senate. Neither the plaintiffs' bar nor the governor stopped it.

The statute does more than require disclosure. A prohibited litigation funding agreement is void. The Attorney General can bring an action in which the court may impose civil penalties of up to $50,000 per violation. A person injured by a prohibited arrangement can sue and elect treble damages, plus costs and reasonable attorney fees. The ban covers funding of arbitration and administrative proceedings as well as court litigation. That detail gets little attention, but it matters a great deal to the mass-arbitration market (discussed below).

The carve-outs define what is still lawful. Pro bono support is exempt. So are an insurer's defense or indemnity obligations, and loans or other financial support whose repayment does not depend on the outcome of a proceeding. The attorney's own Contingency Fee is not a prohibited investment. Commentary on the enacted text also notes that the applicability clause is narrower than the prohibition. A funder holding an agreement signed before June 22 on a case already pending is largely outside the statute's reach, so the practical effect will grow as new matters are filed.

Insurance Journal reported on Aug. 20, 2026 that the expected "domino effect" has not happened. No other state bill copies the ban, and none is expected to pass. The publication's explanation is doctrinal. North Carolina still enforces champerty, the common-law bar on strangers financing a lawsuit for a share of the recovery, so the statute codified a hostility that its courts already had. Most states abandoned champerty long ago, and in those states disclosure and registration are the realistic ceiling.

The 2026 class: Ohio, Mississippi, Tennessee, Utah and California

The four states named in the Triple-I release each took a different route.

Ohio. Substitute HB 105, signed by Governor Mike DeWine on July 7, 2026, took effect Oct. 6, 2026. It creates Revised Code Chapter 1357 and requires consumer legal funding companies and commercial litigation financiers to register with the Attorney General. It also bars foreign governments, corporations and investors from funding Ohio claims. R.C. 1357.07(C) requires a commercial financing agreement to be produced to every named party and every insurer with a potential duty to defend at the time the claim is asserted, with no discovery request needed. Automatic production to insurers is among the most aggressive disclosure mechanisms any state has adopted. Our earlier analysis covers the Ohio HB 105 effective date in detail.

Mississippi. Governor Tate Reeves signed SB 2747, introduced as the Transparency in Consumer Legal Funding Act. The bill began as a broad consumer-funding code with registration through the Secretary of State, attorney acknowledgments and a ban on prepayment penalties. The version sent to the governor focuses on foreign money. A foreign third-party litigation funder (a foreign person, a foreign entity of concern or a foreign sovereign wealth fund) must disclose specified information to the Attorney General in writing within 30 days after executing a funding agreement. Practitioners should read the enrolled text rather than the introduced version, because commentary on the two differs widely.

Tennessee. The Tennessee General Assembly's records show that SB 2101 was substituted for the House companion, HB 2108, and signed on May 26, 2026 as Public Chapter 1005. Some bill trackers still list HB 2108 as dead for that reason. Practitioner commentary from Butler Snow reports that a party using covered funding generally must disclose the financing agreement itself to the court and to the other parties within 14 days after filing its initial pleading. The House sponsor's floor remarks described the foreign-adversary bar as covering China, Cuba, Iran, North Korea, Russia and Venezuela. The Act also bars funders from directing decisions about the course of the litigation.

Utah. HB 280, the Third Party Litigation Funding Amendments, passed the House on Feb. 24, 2026. It was reported signed March 18 and took effect May 6, 2026. It requires funding providers, now including commercial funders, to register with the Division of Consumer Protection. It bars a provider from directing or controlling litigation decisions, extends a consumer's rescission right from five to ten days, adds annual reporting and restricts certain foreign investors. The Utah Association for Justice worked with the sponsors and did not oppose the final bill. That makes HB 280 a rare negotiated outcome in a fight that is usually one-sided.

California. Triple-I's list leaves out California. Governor Newsom signed AB 2305 in September 2026 as Chapter 393, Statutes of 2026. It treats a corporate funder's interference with substantive litigation decisions as the unauthorized practice of law, voids contract terms that allow it, and exposes attorneys and funders to $10,000 per violation or treble damages. It applies to contracts entered on or after Jan. 1, 2027. The bill was sponsored by Consumer Attorneys of California, the state's plaintiffs' bar. California's model regulates who controls the case, not who knows about the money, and it sits alongside the state's 2025 California Consumer Legal Funding Act (AB 931). See our coverage of California AB 2305.

Earlier laws: from Wisconsin's disclosure rule to the foreign-funding wave

The 2026 laws sit on top of earlier ones. Wisconsin became the first state to require automatic disclosure of funding agreements in 2018. Montana followed in 2023 with a statute that applies to any civil action. It also bars funders from deciding whether to file claims or controlling case strategy and resolution. Indiana's HB 1160 and Louisiana's SB 355, both enacted in 2024, combined limits on foreign money with bans on funder control. West Virginia's SB 850 extended the state's consumer-funding regime to commercial funding while keeping an 18% annual cap on consumer charges.

The 2025 legislative sessions produced the largest single wave of these laws. Georgia's SB 69, the Georgia Courts Access and Consumer Protection Act, took effect for most purposes on Jan. 1, 2026. Anyone engaged in litigation funding in Georgia must register with the Department of Banking and Finance through the Nationwide Multistate Licensing System. Registration filings are public and include ownership and foreign affiliations. Funders affiliated with a foreign government or a Commerce Department-designated foreign adversary are barred. Funding agreements are discoverable in the funded case, with a $25,000 threshold for certain arrangements, and funders may not direct strategy or choose counsel. Consumers get a five-day right to cancel.

Kansas's Substitute for SB 54 amended K.S.A. 60-226, the state's discovery statute. It requires disclosure of funding agreements, including whether a foreign person from a "foreign country of concern" is behind the money, defined by reference to the Commerce Department's foreign-adversary list as of July 1, 2025. Courts forward the agreements to the Kansas Judicial Council for study, and the reports are confidential. The Senate passed the substitute 39-1 on Feb. 19, 2025. Oklahoma's HB 2619 requires parties to state by affidavit whether funding comes from a foreign source. Colorado's HB 25-1329 requires foreign funders to disclose to the Attorney General and voids non-compliant agreements.

Arizona went furthest through its courts. The Legislature passed SB 1215, which bars funding from "foreign entities of concern" and prohibits funders from controlling litigation decisions, effective Dec. 31, 2025. The final version dropped a provision that would have let courts sanction a party for nondisclosure. Separately, the Arizona Supreme Court added Rule 8(j) to the Arizona Rules of Civil Procedure, and an administrative directive approved a funding certificate form for superior court use from Jan. 1, 2026. The Arizona Chamber of Commerce called it the first time any state court had moved on its own to increase funding transparency. The certificate creates a docket entry, so the courts can collect data on how many cases are funded.

The foreign-funding theme runs through almost every enactment since 2024. It is the one point on which plaintiffs' lawyers and defense groups often agree, which explains why the foreign bans pass with lopsided votes while broader disclosure bills stall.

Is there a federal rule requiring litigation funding disclosure?

No. As of Oct. 24, 2026, the Federal Rules of Civil Procedure do not require parties to disclose third-party litigation funding, and Congress has not passed a disclosure statute. Disclosure in federal court depends on local rules, standing orders and individual judges.

The Senate bill. Senator Chuck Grassley introduced S. 3826, the Litigation Funding Transparency Act of 2026, on Feb. 11, 2026, with Senators Thom Tillis, John Kennedy and John Cornyn as cosponsors. It would amend Chapter 115 of Title 28. It reaches class actions, multidistrict litigation and large coordinated federal proceedings of 100 or more cases. It would require public disclosure of third-party funding, including money from foreign states, foreign persons and sovereign wealth funds. Funders would be barred from influencing litigation strategy or settlement and from viewing material produced under a protective order. Nonprofit legal organizations are exempt. The bill was referred to the Judiciary Committee and has not moved. A House bill, the Litigation Transparency Act of 2025 (H.R. 1109), would require disclosure of anyone with a right to payment contingent on the outcome of a case.

The rules committee. The Advisory Committee on Civil Rules created a third-party litigation funding subcommittee in October 2024, chaired by Judge David Proctor. Minutes from the April 2026 meeting show the subcommittee was still working through basic design questions, starting with how to define the financing arrangements that would trigger disclosure. Two competing suggestions arrived before the Oct. 21, 2026 meeting. Lawyers for Civil Justice and the U.S. Chamber Institute for Legal Reform filed a September suggestion seeking automatic disclosure of funding agreements to adversaries, and a separate letter from 214 companies backed a uniform Rule 26(a)(1)(A) disclosure. The International Legal Finance Association, the funders' trade group, filed its own suggestion dated Oct. 7. The agenda book also lists a Federal Judicial Center study by Emery Lee of funding disclosures in the District of New Jersey from June 2021 to June 2026. New Jersey's local rule has been in force longest among federal districts, so that study is the best available evidence of what a disclosure rule produces in practice. Minutes of the Oct. 21 meeting had not been posted as of this writing, and no outcome has been publicly reported. Our earlier piece covers the Rule 26 litigation funding disclosure petition.

Even if the committee approved a draft tomorrow, the federal Rules Enabling Act process runs through publication for comment, the Standing Committee, the Judicial Conference and the Supreme Court before Congress gets its review period. A new rule is therefore several years away at the earliest.

Courts acting alone. The Triple-I release singles out the Western District of Louisiana, which published Standing Order 1.75 on Sept. 9, 2026. It applies across the district's Alexandria, Lafayette, Lake Charles, Monroe and Shreveport divisions. Litigants must disclose the name and address of each third-party funder and give a short description of the arrangement. They must also state whether the funder can approve or influence significant decisions, including settlement. They need not produce the full agreement. One report puts the deadline at 14 days after appearing or signing a funding agreement. ILFA described the order as limited because it does not reach "sensitive work-product information."

MDL judges are also acting case by case. On Oct. 14, 2026, Chief Judge Nancy Rosenstengel of the Southern District of Illinois, who oversees the paraquat MDL, ordered a plaintiffs' lawyer to disclose who finances his inventory after only 49 of his roughly 750 clients joined the Syngenta and Chevron settlement. The episode shows why defendants want funding disclosure in mass torts. When a Global Settlement depends on participation thresholds, defendants want to know whether an outside capital provider is influencing which clients opt out.

The cost argument and the access argument

The Triple-I release cites a joint Triple-I and Casualty Actuarial Society analysis estimating that legal system abuse added between $231.6 billion and $281.2 billion to liability insurance losses over the past decade. Some coverage rounded this to "more than $230 billion" and attributed it to litigation funding alone. That is not what the estimate measures. It covers a bundle of trends that insurers group under "legal system abuse" (attorney advertising, mass tort marketing and large verdicts among them, alongside funding), and funding is only one input. The institute is funded by insurers, so the figure should be read as an industry estimate.

The plaintiffs' bar answers with an access argument. Consumer pre-settlement funding lets an injured client who cannot work cover rent while an insurer delays. Commercial funding lets small firms take on defendants with far larger litigation budgets. Mandatory disclosure, on this view, gives defendants a map of which plaintiffs are financially stretched and can be outwaited. Those concerns explain why the more successful 2026 bills were negotiated, as in Utah, or aimed at control rather than disclosure, as in California. Both sides also agree that foreign-adversary money should be kept out of US courts, which is why that provision appears in nearly every statute since 2024.

Do state litigation funding laws apply to mass arbitration?

Some of them do, and the North Carolina statute does so expressly. HB 315 prohibits funding of arbitration and administrative proceedings as well as lawsuits. A funder that finances a Mass Arbitration campaign against a North Carolina-based respondent, or on behalf of North Carolina claimants, therefore needs to assess whether the arrangement is outcome-contingent and void. That analysis covers filing-fee advances, claimant acquisition costs and the working capital that lets a firm carry thousands of individual demands through the American Arbitration Association (AAA) or JAMS.

Elsewhere the answer depends on drafting. Statutes that operate through civil procedure rules (Kansas's amendment to K.S.A. 60-226, Wisconsin's discovery rule, Arizona's Rule 8(j)) apply in court, not before an arbitrator. Statutes built on registration and prohibited conduct, such as Georgia's registration requirement, Ohio's Chapter 1357 and Utah's Division of Consumer Protection regime, attach to the funder and the contract, wherever the claim is pursued. Foreign-funding bans generally do not depend on the forum either. Counsel facing a mass filing can raise funding questions with a process arbitrator, but no provider rule currently requires a claimant to disclose funding.

The question is practical. Mass-arbitration platforms now raise venture capital openly. Chariot Claims announced a $10 million Series A on Oct. 15, 2026, and says it handles more than 200,000 pre-qualified claims a month for partner firms. As capital flows into claimant aggregation, respondents will test whether state funding statutes reach the platforms that originate and finance arbitration demands, not just the lawyers who file them.

What it means for personal injury firms, defendants and funders

For personal injury and mass tort firms. Firms need a state-by-state compliance check before signing any new portfolio facility or client-level advance. In Ohio, Georgia and Utah, confirm the funder is registered. In Tennessee and Ohio, plan for the agreement to reach opposing counsel, and in Ohio the insurer, on a short timetable. In North Carolina, treat any outcome-contingent commercial arrangement on a new matter as presumptively void. In California, review control provisions in funding documents against AB 2305 before Jan. 1, 2027. Retainer Agreement language that discusses client-side funding should match what a court in the forum state may require the firm to disclose.

For mass-arbitration counsel. North Carolina's explicit coverage of arbitration means claimant-side capital structures need forum-by-forum review. They should not be treated as outside the litigation funding debate because no court is involved. Registration states also reach the funder wherever the claim is brought.

For defendants and insurers. The patchwork gives defense counsel more tools: automatic production in Ohio and Tennessee, discovery in Georgia, Kansas and Indiana, registration records in Georgia and Utah, and federal standing orders such as the Western District of Louisiana's. It does not provide a uniform national rule. Defense groups are pursuing that through S. 3826 and the Rule 26 petition, and both remain years from producing results.

For funders. The compliance burden now differs by state and by product. Consumer pre-settlement lenders, commercial portfolio funders and mass-arbitration financiers each face different registration, disclosure and control rules. Foreign capital sources face exclusion in most of the states that have acted since 2024.

What to watch next

Three events will shape the next round. The first is the Advisory Committee on Civil Rules minutes from Oct. 21, which will show whether the subcommittee is moving toward a draft rule or still gathering facts, and how the Federal Judicial Center's New Jersey data was received. The second is the 2027 legislative calendar. Florida is the market insurers most want to see act, and Insurance Journal expects the state-by-state fight over disclosure and foreign funding to continue through 2027 even though the North Carolina ban has not spread. The third is the first enforcement action or court challenge under North Carolina's HB 315. Its applicability clause, its reach into arbitration and the size of its penalties will be tested in a real case.

FAQ

How many states require litigation funding disclosure?

More than 20 states regulate third-party litigation funding in some form, according to Triple-I's October 2026 brief, although the count depends on whether consumer pre-settlement lending statutes are included. Wisconsin (2018) was the first to require automatic disclosure. Tennessee and Ohio now require the agreement itself to be produced early in the case.

Which state banned litigation funding?

North Carolina is the only state with an outright ban. HB 315, signed June 22, 2026 as Session Law 2026-14, voids prohibited funding agreements, authorizes Attorney General penalties of up to $50,000 per violation, allows treble damages and covers arbitration and administrative proceedings.

What did the Triple-I litigation funding report say?

The Oct. 20, 2026 brief says more than 20 states have enacted funding laws and identifies Ohio, Mississippi, Tennessee and Utah as 2026 adopters. It notes that the federal Litigation Funding Transparency Act has stalled and cites an estimate that legal system abuse, including funding, added $231.6 billion to $281.2 billion to liability insurance losses over a decade.

Is there a federal rule requiring litigation funding disclosure?

No federal rule or statute requires it as of October 2026. S. 3826 is pending in the Senate Judiciary Committee, the Advisory Committee on Civil Rules is studying a Rule 26 proposal, and disclosure in federal court depends on local rules such as New Jersey's and standing orders such as the Western District of Louisiana's.

What happened at the October 21 civil rules committee meeting on litigation funding?

The committee's Oct. 21, 2026 agenda included third-party litigation funding, a Federal Judicial Center study of District of New Jersey disclosures from 2021 to 2026, and competing suggestions from Lawyers for Civil Justice and the U.S. Chamber Institute for Legal Reform on one side and the International Legal Finance Association on the other. No decision had been publicly reported as of Oct. 24, 2026.

Does a personal injury plaintiff have to disclose pre-settlement funding?

It depends on the state and the court. In states such as Georgia, Kansas and Indiana, funding agreements are discoverable. Ohio and Tennessee require early production, and Wisconsin and Montana require disclosure by statute. In most other states and in most federal courts, disclosure happens only if a judge orders it.