Committee considers consumer protections and registration for third‑party litigation financing

House Bill 5221 would create a regulatory framework for third‑party litigation financing (TPLF), requiring disclosures and registration for entities that fund civil cases in exchange for a share of any recovery. Representative Finkelman introduced the bill as part of a package meant to reduce litigation-driven cost inflation.

Proponents from the insurance and business sector, including representatives of the American Property Casualty Insurance Association and the Rhode Island Insurance Federation, urged registration and transparency. Jonathan Schreiber said the TPLF market has grown rapidly and that large funders can exert influence on strategy and settlements; Christopher Stark and other insurance witnesses called for reporting so policymakers can assess market scope.

Opponents, including the Rhode Island Association of Justice, argued the bill would effectively legitimize high‑cost loans to plaintiffs. Christina Fernandez said advances from litigation lenders function as loans against a future recovery and that the bill as drafted does not cap interest rates; she urged that these transactions be subject to the state usury statute.

Witnesses from both sides described harms they say the other party creates: insurers warned that undisclosed funders can encourage riskier litigation strategies; plaintiff advocates warned that unrestricted advances can consume a large share of a plaintiff’s recovery. The committee did not take final action and asked parties to continue discussions on disclosure, registration and any interest-rate limits.