Letter to the editor: Consumer legal funding funds people, not lawsuits

OPINION:

Consumer legal funding

Concerns about foreign governments using litigation financing to gain access to sensitive information or advance strategic interests against American companies deserve serious attention.

Consumer legal funding is not commercial litigation financing and policymakers must distinguish between the two. The former — which can help an injured American pay rent, utilities or groceries — is not a national security threat.

This year, Kansas demonstrated how policymakers can address legitimate national security concerns without restricting consumers’ access to needed financial assistance. H.B. 2518, the Transparency in Consumer Legal Funding Act, specifically prohibits consumer legal funding companies from accepting funds from a “foreign government or foreign adversary,” as defined under federal law.

It also clearly defines consumer legal funding as a non-recourse transaction in which funds provided to consumers are used for household or personal expenses. It specifically excludes expenses directly related to prosecuting a legal claim.

Simply put, consumer legal funding funds people, not lawsuits.

The typical recipient may be someone who was injured in an automobile accident and cannot work and needs several thousand dollars to make a mortgage or rent payment, keep the electricity connected, make a car payment or put groceries on the table while waiting for a legal claim to be resolved.

That bears little resemblance to multimillion-dollar commercial litigation that could involve sensitive corporate information or legitimate national security concerns.

Kansas recognized that distinction. H.B. 2518 passed unanimously in both the Republican-controlled state House and Senate and was signed into law by Democratic Gov. Laura Kelly.

The law also establishes important consumer protections and prohibits consumer legal funding companies from controlling litigation or settlement decisions or knowingly using consumer legal funding transactions to pay attorney fees, court costs or filing fees.

Most importantly for the national security debate, under the Kansas law, foreign governments and foreign adversaries cannot fund consumer legal funding companies.

That is targeted policymaking.

If foreign adversaries are financing litigation to obtain sensitive information, prohibit it. If outside financiers attempt to control litigation strategy, stop them.

But an injured American receiving $3,000 or $4,000 to keep the rent paid is not a national security threat.

Kansas offers a bipartisan model for the nation: protect consumers, prohibit foreign-adversary involvement and preserve access to legitimate financial assistance.

ERIC SCHULLER

President, Alliance for Responsible Consumer Legal Funding (ARC)

Chicago, Illinois