Montana committee hears expanded restrictions on litigation financing, including a foreign-adversary ban

Senator Greg Hertz, sponsor of Senate Bill 511, told members of the House Business and Labor Committee the bill builds on 2023 legislation and seeks to address growing third-party litigation financing (TPLF) activity and potential foreign influence in U.S. lawsuits. "This bill builds on what we did last session," Hertz said, summarizing changes to definitions, exemptions for nonprofits and new prohibitions for "foreign adversaries."

Charles Robinson of the Montana Chamber of Commerce described litigation finance as a large and growing global industry and told the committee it can "drive up the cost of litigation, delay settlements, and appear to be providing foreign governments with a new front to attack America." He urged the committee to support SB 511’s ban on foreign-adversary investors and to adopt additional transparency measures; Robinson said the industry is a roughly "$39,000,000,000 global industry."

Supporters at the hearing included insurers, trade groups and business associations: an attorney for ALPS (a Missoula-based insurer) told the committee Montana’s approach would reduce forum shopping and protect the state from becoming a favored venue; Sonny Capice of the Montana Petroleum Association and Duane Williams of the Montana Trucking Association urged clarity and transparency; and representatives from the Secretary of State’s office and the American Property Casualty Insurance Association testified in favor. Witnesses described the bill’s key provisions: tightening definitions (section 1), defining proprietary information (section 9), clarifying nonprofits’ exemption (section 4), and prohibiting participation by foreign adversaries and related foreign persons (section 8), with additional transparency and registration requirements in sections 10–11.

Al Smith, representing the Montana Trial Lawyers Association, testified as an opponent and criticized elements of the bill carried over from 2023. Smith said mandatory disclosures to opposing counsel, as required under the 2023 law, can be used by defense attorneys to pressure plaintiffs who have taken financing because they are cash constrained. “Why is the state using its power to force us to provide information to our opponents?” Smith asked, arguing the better repository for registration would be a government office such as the Secretary of State rather than opposing counsel in litigation. He also warned that the new definitions and reporting requirements in SB 511 create additional compliance traps and urged the committee to consider reporting to a government registry rather than defense counsel.

Committee members asked about specific protections, including whether attorneys can have financial interests with financing firms; Robinson said the bill does not currently prohibit that practice and that some lines are blurred nationally. Representative questions also focused on how the bill treats nonprofit litigant-support organizations and whether reporting requirements would deter access to needed funding. Proponents said the bill clarifies that legitimate nonprofits remain exempt from restrictions when they are not profiting from litigation fundraising.

Why it matters: Proponents argued SB 511 protects Montana companies and consumers from predatory financing arrangements and prevents foreign-adversary control of litigation that might be used to access proprietary information. Opponents said expanded disclosure rules may give defendants strategic leverage and could chill plaintiffs’ access to financing or legal representation.

Next steps: The committee closed the hearing on SB 511; sponsors and stakeholders indicated they would continue discussions on technical fixes and possible amendments before the bill moves forward.