State Rep. Doug Wozniak yesterday voted in favor of legislation creating new transparency and consumer protection standards for third-party litigation funding in Michigan.

House Bill 5281 establishes new consumer protections and transparency requirements for third-party litigation funding agreements, where outside investors finance lawsuits in exchange for a share of future settlements or court awards. The legislation requires clear disclosures for plaintiffs, sets standards for contracts, and prohibits foreign adversaries from participating in these agreements.

“When outside investors are financially involved in lawsuits, there needs to be transparency and accountability,” said Wozniak (R-Shelby Township). “This plan puts commonsense guardrails in place to protect consumers, strengthen confidence in our courts, and prevent foreign adversaries from exploiting gaps in the system.”

The legislation also requires litigation funding companies operating in Michigan to register with the state and comply with consumer protection standards overseen by the Department of Insurance and Financial Services.

HB 5281 passed the House with bipartisan support and now advances to the Senate for further consideration.