Perspective: Truckers deserve lawsuit transparency

The courtroom was never meant to be a casino for Wall Street.

Yet today, hedge funds, private equity firms and foreign sovereign wealth funds are secretly wagering on lawsuits between other parties, investing in litigation the way others invest in stocks, bonds or commodities. They’re not doing it in the interest of justice; they’re doing it because they see our civil justice system as a profit opportunity.

This hidden, multibillion-dollar industry is called third-party litigation financing, and it’s doing real damage. It’s driving up the cost and duration of lawsuits, fueling inflated claims, exploiting plaintiffs through predatory lending arrangements and threatening businesses like family-owned trucking companies.

That was the focus of a recent roundtable with the House Judiciary Committee, where I spoke on behalf of the men and women of trucking.

Access to justice matters. There are situations in which plaintiffs may need funding to pursue valid claims. Truckers believe in fairness, accountability and the right of every American to have their day in court. But that’s not the problem we are confronting.

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Hodgen 

What we see now is different: investors pouring money into civil litigation not to advance justice, but to maximize their own payouts. These financiers often have no connection to the case, no accountability to the communities affected and no obligation to the plaintiff beyond the terms of a contract designed to enrich the lender.

Trucking is a prime target. More than 90% of motor carriers are small businesses operating 10 trucks or fewer. These are local employers that keep America’s supply chain moving. Yet they’re being dragged into lawsuits fueled by outside capital, inflated claims and settlement demands untethered from reality.

This is a David-versus-Goliath fight. Truckers are the David, but often, they’re not even allowed to know who Goliath is.

Litigation financing deals are usually kept hidden in federal and state courts. They’re not automatically disclosed, and the other side often has no right to see them. That means only the plaintiff, the funder and their lawyers may know the terms of the deal, including the funder’s high rates, its control rights and whether it gets paid before the injured person once the case settles or a verdict is reached. As a result, these funders can operate in the shadows, with little oversight, no accountability and no clear way to identify potential conflicts of interest.

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ATA Chairman Greg Hodgen (right) shakes hands with House Judiciary Committee Chairman Jim Jordan as Sentry Insurance Chief Information Officer Jim Frank looks on during the congressional roundtable. (American Trucking Associations)

Third-party financiers can prolong litigation by discouraging reasonable settlements. When a funder’s profit depends on holding out for a bigger payday, the plaintiff’s interests take a back seat. Cases that should be resolved fairly and efficiently become vehicles for financial speculation.

Sometimes, these arrangements can encourage abusive practices that harm the very people they claim to help. At the roundtable, lawmakers heard examples of litigation financing being tied to medical treatment schemes, including unnecessary procedures used to inflate the value of lawsuits. Plaintiffs can be steered into questionable care, while providers and financiers position themselves for a larger recovery.

The predatory nature of these arrangements concerns everyone. Traditional loans come with disclosures, consumer protections and rules, but litigation financing agreements are often opaque. Interest rates can reach levels that would shock ordinary borrowers. Plaintiffs who believe they are gaining financial support can later discover that a large share of their settlement belongs to the lender.

The result is a system where truckers pay more, plaintiffs receive less and financiers profit from both sides. And when trucking costs rise, Americans feel it. Higher transportation costs ripple through the economy and show up in the price of groceries, medicine and more. Litigation abuse may start in a courtroom, but it ends at the checkout line.

That is why Congress should act.

The Protecting Third Party Litigation Funding From Abuse Act is a common-sense step toward restoring transparency. It doesn’t ban third-party litigation financing or prevent legitimate claims from moving forward. It simply says that if an outside party has a financial stake in a lawsuit, it should be identified.

Truckers aren’t asking for special treatment — just a fair process. We’re asking that Main Street businesses not be forced to fight invisible Wall Street interests in court. And we’re asking lawmakers to recognize that litigation abuse isn’t just a legal issue. It’s an economic issue, a consumer issue and a supply chain issue.

Truckers will continue delivering for our communities. Now Congress has an opportunity to deliver something trucking and the American people deserve: transparency, accountability and fairness in our courts.

Greg Hodgen is CEO of Groendyke Transport.