ATA chairman calls for disclosure rules on lawsuit funders

Why is third-party litigation financing a problem for trucking?

American Trucking Associations Chairman Greg Hodgen says a "hidden, multibillion-dollar industry" of third-party litigation financing is inflating lawsuit costs for carriers without any requirement that plaintiffs disclose who is bankrolling their claims.

Third-party litigation financing allows outside investors to fund lawsuits in exchange for a share of any settlement or verdict. Hodgen argues the practice is doing "real damage to trucking" by enabling more aggressive litigation against carriers.

The ATA chairman is pushing for transparency rules that would require plaintiffs to disclose when outside investors are funding their cases. Currently, no federal rule requires such disclosure in most civil litigation.

How litigation financing affects carrier costs

Carriers face the cost impact in two ways. First, outside funders have no stake in settling quickly or reasonably, since they profit only from large verdicts. Second, the lack of disclosure means carriers cannot assess whether a plaintiff has the financial backing to pursue a case to trial, making settlement decisions harder.

The issue ties directly to the broader insurance and litigation cost squeeze that has kept new carriers out of the market. As litigation, regulation, and insurance costs block new entrants, established fleets are absorbing higher premiums driven in part by nuclear verdicts in truck-accident cases.

What ATA wants changed

Hodgen is calling for federal or state rules that would force plaintiffs to disclose third-party funding arrangements at the start of litigation. That would let carriers and their insurers know when deep-pocketed investors are backing a claim and adjust their legal strategy accordingly.

Several states have considered litigation-financing disclosure bills in recent years, but no uniform federal standard exists. The trucking industry argues that without transparency, carriers are negotiating settlements in the dark while investors with no connection to the accident extract profits from the outcome.

The ATA has not released specific legislative language or a timeline for pushing disclosure rules through Congress or state legislatures. Hodgen's commentary signals the association intends to make litigation financing a lobbying priority alongside other liability-reform efforts.

What this means for small fleets

Small carriers and owner-operators already face insurance premiums that have doubled or tripled in the past five years, driven largely by the rising cost of defending and settling accident claims. If third-party funders are pushing plaintiffs to reject reasonable settlements in favor of trial verdicts, that trend will continue.

Transparency rules would not cap verdicts or limit damages, but they would give carriers and insurers more information to work with when deciding whether to settle or fight a case. For a small fleet, that could mean the difference between a manageable settlement and a bankruptcy-triggering judgment.

Until disclosure rules pass, carriers have no way to know whether the plaintiff suing them is a single injured party or a well-funded litigation portfolio backed by Wall Street investors.