Op-Ed: HB925 Protects Consumers and the Marketplace— Without Confusing It with Litigation Financing
By Representative Blair Eddins
The North Carolina General Assembly is considering two very different approaches to the issue of money and the courts. House Bill 315 would ban litigation financing in its entirety. House Bill 925, the Consumers in Crisis Protection Act, would instead regulate consumer legal funding with strong safeguards for families and businesses.
At first glance, these two bills might appear to cover the same ground. Both address money flowing into the legal system. But the truth is simple: consumer legal funding is not litigation financing. Conflating the two risks depriving North Carolinians of a vital financial lifeline while eliminating a responsible marketplace that can operate safely under the right rules.
A Lifeline for Consumers in Crisis
Imagine a single mother injured in a car accident. She cannot work, but her case could take 18 months to settle. The bills don’t stop coming—rent is due, the power bill arrives, groceries have to be bought, and childcare must be paid. Her options are limited: high-interest payday loans, maxing out credit cards, or borrowing money from friends and family.
This is where consumer legal funding makes a difference. It allows her to access small, nonrecourse funds against the potential proceeds of her case. She uses the money for rent and groceries—not attorney fees or litigation costs, which are explicitly prohibited. If she loses her case, she owes nothing. If she wins, she pays back only what is agreed upon in advance.
HB925 ensures that this kind of funding is provided safely and fairly. Contracts must be written in plain language, free from hidden terms. Consumers must receive clear disclosures, including the total repayment amount at six-month intervals for three years. There is a 10-day rescission period, giving consumers the right to cancel without penalty. And critically, charges stop accruing after 36 months. Consumers maintain full control over their case—funders cannot influence settlement decisions or litigation strategy.
This is not litigation financing. It is not about bankrolling lawsuits. It is about helping families keep the lights on while justice runs its course.
Protecting the Marketplace and Businesses
HB925 creates a clear framework for doing business in North Carolina:
- Registration and oversight. Companies must register with the Department of Insurance, pay licensing fees, and demonstrate financial stability. Each company must post a $50,000 bond or letter of credit to protect consumers.
- Strict prohibitions. No kickbacks to attorneys or healthcare providers. No conflicts of interest. No funding from foreign adversaries.
- Transparency and accountability. Contracts must be filed with the Commissioner, and the Department of Insurance has authority to examine companies and penalize violations.
- Enforcement with teeth. Penalties include fines up to $10,000 per violation, license revocation, cease-and-desist orders, and restitution for injured consumers.
- Consumers must be represented by an attorney before entering into an agreement.
This framework weeds out bad actors while creating a level playing field for responsible businesses. It allows the industry to provide a valuable service without undermining the integrity of the legal system.
The Critical Difference: Not Litigation Financing
The key to this debate is understanding the distinction between consumer legal funding and litigation financing.
- Litigation financing, addressed in HB315, involves outside investors paying for lawsuits themselves—covering attorney fees, expert witnesses, and discovery costs. In return, those investors may seek influence over litigation strategy and settlements, raising concerns about distorting justice and even creating national security risks if foreign money flows into American courts.
- Consumer legal funding, regulated under HB925, is entirely different. It is strictly for household and personal expenses. The money cannot be used for legal costs, and funders have zero say in how the case is handled. The consumer and their attorney retain full control.
By passing HB925, North Carolina can regulate consumer legal funding on its own terms, while leaving litigation financing to be addressed under HB315. This clear separation ensures that the civil justice system is not compromised while families still have access to the financial help they need.
The Right Path Forward for North Carolina
HB925 is that balanced approach. It ensures transparency, accountability, and fairness. It gives consumers a fair financial lifeline. It provides businesses with clear rules to operate responsibly. And it makes absolutely clear that consumer legal funding is not litigation financing.
At its heart, HB925 is about trust: trust that North Carolina can regulate fairly, protect its residents, and support a marketplace that serves both economic and human needs. That is why lawmakers should move forward with HB925. It’s not just smart policy—it’s the right thing to do for our families, our businesses, and our state.
Are you tired of being bombarded by paywalls and pop-up ads when trying to read the news? Do you believe that access to reliable political news should be free and accessible to everyone? Then we urge you to support NC Political News, a weekly electronic political news outlet.
NC Political News is committed to providing high-quality, unbiased political reporting with columnists from all political sides. Unlike other news outlets, NC Political News is free to read and supported by businesses who purchase ad space on our website and in our newsletter, which goes out Monday through Friday at 7:00 am. This means that readers like you can access the news without being asked to pay a cent or dealing with frustrating advertisements.
However, to continue providing this valuable service, NC Political News needs your support. If you believe in the importance of accessible, free news, we urge you to click the image below. Any amount of support is appreciated.
Together, we can keep the news free and help ensure our state stays informed and connected.
