Minn. task force debates third‑party litigation funding bill amid split testimony

ST. PAUL — The Property Insurance Task Force spent the bulk of its Jan. 21 meeting wrestling with whether to recommend the legislature back Senate File 2929, the Consumers in Crisis Protection Act, a bill that would regulate third‑party litigation funding and require disclosures in consumer funding contracts.

Sen. Seaburger, the bill’s author, told the task force the measure is “consumer protection related,” pointing to provisions that would require clear contracts, a 10‑business‑day rescission right and registration and reporting requirements for funding companies. “There is nothing in this bill that prevents a litigant from bringing their claim in district court,” Seaburger said, arguing the rules would bring daylight to previously opaque funding arrangements and protect consumers from predatory practices.

Several witnesses urged caution. Joel Carlson of the Minnesota Association for Justice said disclosure mandates and broader discovery would often delay cases and harm people who use small advances to pay living expenses while pursuing legitimate claims. “The tort tax was invented … and it is completely made up,” Carlson said, disputing industry claims that litigation is driving homeowners’ premiums upward and citing court filings showing a decline in personal‑injury cases.

Patrick Hynes, representing the Alliance for Responsible Consumer Legal Funding (ARC), asked the task force to distinguish commercial third‑party litigation funding from consumer legal funding, which he described as smaller, nonrecourse advances typically ranging from $3,000 to $5,000. Hynes recommended any recommendation focus on large commercial funders rather than consumer legal funding.

Anna Odigard of Minnesotans for Consumer Financial Protection urged the group to weigh speculative premium savings against concrete harms. Quoting industry data and NAIC materials, she said Minnesota shows about 0.6 percent of denied homeowners’ claims resulted in a lawsuit in 2024 — far lower than some other states — and that defense and cost‑containment spending nationally is roughly 1.5 percent of premiums. “Even if tort reform halved those costs, a $4,000 premium might fall by only $10,” Odigard said, warning that small savings could come at the expense of substantial limits on access to the courts.

Members pressed for more detail. Several legislators and agency staff said the task force should be precise about what it is recommending — passage as introduced, a hearing, or simply further study — and asked whether a fiscal note has been requested. Task force members also debated differences between liability, breach‑of‑contract and bad‑faith claims and whether reforms in other states (discussed during testimony) are directly comparable to Minnesota’s legal and insurance environment.

The chair and members signaled they were not ready to recommend the bill as written. Instead they discussed drafting narrower language for the task force record — for example, urging the legislature to examine regulations addressing third‑party litigation funding and to consider Senate File 2929 as a starting place. Staff said it would circulate revised language before the next meeting, scheduled for Feb. 5; no formal recommendation or vote on the bill was taken at the Jan. 21 meeting.

The meeting record shows the debate brought out sharply different views from plaintiffs’ attorneys, consumer advocates and industry‑aligned funders, with participants urging the task force to avoid adopting a final posture without clearer fiscal and stakeholder analysis.