RIMS Applauds North Carolina's Third-Party Litigation Funding Ban

(NEW YORK) June 30, 2026 - RIMS, the risk management society®, commends the North Carolina legislature for their prudent decision to prohibit third-party litigation funding (TPLF) in the State. Specifically, the legislation makes it "unlawful for a person to engage in litigation investment in this State or to furnish litigation investment to a party or counsel of record in a civil proceeding in this state." A funder can incur civil penalties of up to $50,000 per violation. The law includes exceptions such as pro bono funding, insurers' defense or indemnification obligations, or loans or financial support not contingent on a proceeding's outcomes.

TPLF remains one of RIMS legislative priorities. The Society will continue to dedicate resources that support advocacy initiatives that raise awareness about TPLF's devastating impacts on the economy, the security of intellectual property from both domestic and foreign competitors, and organizations' ability to financially address legal risks while delivering affordable goods and services.

"Third-Party Litigation Funding distorts the purpose of our legal system," said RIMS President Manny Padilla. "It allows outside investors to profit from lawsuits at the expense of plaintiffs and businesses alike, driving up costs and creating unnecessary financial strain. North Carolina lawmakers have taken an important step toward addressing these concerns, and RIMS looks forward to building on this momentum as we continue to advance this legislative priority. Through the leadership of the RIMS Public Policy Committee and its Legislative Summit activities, the Society has long supported efforts to increase transparency and accountability in Third-Party Litigation Funding arrangements nationwide. We commend North Carolina's leadership for having the foresight to restore balance and transparency in the State's justice system."

About Third-Party Litigation Funding

TPLF is the process whereby third-party funders provide money to a plaintiff or plaintiff's counsel in exchange for a cut of the proceeds resulting from the underlying litigation or settlement. They typically involve a funding agreement that contains the funder's identity, investment amount, payment schedule, and whether the funder may exercise any strategic control over the litigation.

Key TPLF concerns:

• Potential conflicts of interest as funders may have incentives to pursue goals that are not in the best interest of the plaintiffs.
• Foreign adversaries could use TPLF to influence the American legal system.
• TPLF can drive up settlement costs and prolong litigation (in some cases, even when the plaintiff would prefer to settle).
• TPLF raises legal defense costs for commercial entities that could result in those expenses trickling down to consumers.
  

TPFL was a key topic of discussion during RIMS Legislative Summit in March 2026. During the Summit, RIMS members met with members of Congress to discuss the detrimental impacts of TPLF. TPFL will again be a RIMS Legislative Priority that will be discussed during RIMS 2027 Legislative Summit that is scheduled for March 17-18 in Washington, DC.

RISK PAC - RIMS political action committee - allows the Society to financially support the campaigns of legislative leaders who share the risk management community's perspective on key issues that impact the profession, the insurance market, and the economy. To learn more about RISK PAC or to contribute, visit the RISK PAC website.

About RIMS
RIMS, the risk management society®️, empowers risk professionals to make the world safer, more secure, and more sustainable. Through networking, professional development, certification, advocacy, and research, RIMS serves more than 200,000 risk practitioners and business leaders from over 75 countries. Founded in 1950, the Society publishes the award-winning Risk Management Magazine, RIMScast podcast series, and produces RISKWORLD®️, the largest annual gathering of global risk professionals. RIMS welcomes all risk professionals to explore the online Risk Knowledge library, earn the RIMS-CRMP certification, and connect with the global risk community via the RIMS Engage online forum. Follow RIMSorg on X, Facebook, Instagram, and RIMS on LinkedIn. To support the future of the risk management profession, visit RIMS, The Foundation for Risk Management®. To learn more or to join, visit www.RIMS.org.

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