Tackling third-party funding, Strems
Florida’s ranking as first in the country in the number of property insurance lawsuits has now expanded to the top spot in overall litigation. A new report shows how bad it is, even as new efforts are announced by Congress and at least one court to crack down on third-party litigation funding. Also new this week: The Florida plaintiff attorney who became the infamous poster child for excessive property insurance litigation in recent years sees his former law firm go into bankruptcy and now feels taken advantage of.
#1 in Lawsuits: Tribeca Lawsuit Loans, a company that profits on helping plaintiffs fund lawsuits in exchange for a percentage of the award, says its recent study shows Florida is by far the most litigious state in the country. In the one-year period between March 2022 and March 2023, Florida courts saw 59,400 cases filed or 276 cases per 100,000 people. Compare that to runner-up Louisiana with 12,364 cases. The Tampa Bay Journal reports that total legal costs in Florida exceed other states by a big margin, too. “Costs and compensation, or the total dollar amount changing hands due to litigation and defense expenses or damages paid at the conclusion of a lawsuit, exceeded $40 billion in 2020, which amounts to 3.63% of Florida’s gross domestic product,” according to the Journal. As we’ve referenced here many times, Florida has 7% of the nation’s homeowners insurance claims yet 76% of the nation’s homeowners insurance lawsuits, according to the Florida Office of Insurance Regulation.
Congress Taking Note: A U.S. House committee recently held a hearing on so-called Third-Party Litigation Funding (TPLF) of the sort that Tribeca Lawsuit Loans engages in. Chair James Comer (R-KY) talked about the undue influence that questionable third parties are contributing in the filing of complex multi-district mass tort litigation. The committee heard testimony about how this trend is overburdening courts and creating conflicts of interest among attorneys and their clients. They also talked about the cost on consumer goods and services that result from big verdicts. One of the panelists, Aviva Wein, Assistant General Counsel of Johnson & Johnson, testified on the “exponential increase” in the number of mass tort claims against small and large businesses. She said that about 20% to 30% of claims are meritless.
The next day, Sen. John Kennedy (R-LA) and Sen. Joe Manchin (D-WV.) added an international flavor, introducing the Protecting Our Courts from Foreign Manipulation Act of 2023 to stop foreign entities and governments from funding litigation in America’s courts. Rep. Mike Johnson (R-LA) introduced a companion bill in the U.S. House. The bills would require foreign persons and entities that invest in litigation meet a higher level of transparency to U.S. courts and litigants. It would also bar foreign governments and sovereign wealth funds from investing in U.S. lawsuits.
The Florida Legislature has entertained bills in recent years to curb the practice of TPLF but none of the bills has ever made it out of a committee.
Florida Judge Takes Action: In the meantime, a federal judge overseeing 3M’s $6 billion settlement with U.S. military service members over earplug products is warning of the dangers of TPLF. Judge M. Casey Rodgers of the U.S. District Court for the Northern District of Florida has issued an order barring claimants and their attorneys from entering into any TPLF agreements, writing that it is “important that (claimants) are not exploited by predatory lending practices.” He also ordered lawyers to disclose any funding agreements already made by the more than 250,000 claimants.
Former Strems Law Firm Bankrupt: Before his disbarment by the Florida Supreme Court, Scot Strems supposedly sold his interest in The Strems Law Firm of Corals Gables to his remaining partners for $40 million who reconstituted the firm the next week as The Property Advocates. The Insurance Journal reports the firm has now gone broke, in part, because it cannot afford to pay Strems annual payments. Strems has, of course, sued his former partners for distributing the money amongst themselves, but cannot reportedly find the original promissory note. This is a case study in psychopathy and reading it, I didn’t know whether to laugh or cry. You be the judge!
LMA Newsletter of 9-25-23
