Wisconsin Forward: State Enacts Groundbreaking Litigation Funding Transparency Law

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April 03, 2018

By Lisa A. Rickard, President, U.S. Chamber Institute for Legal Reform

Today, Wisconsin Gov. Scott Walker helped the state live up to its “Forward” motto, and made good on his encouragement to the legislature to “get it done” on legal reform in 2018 by signing AB 773 into law.

The groundbreaking law makes Wisconsin the first state in the country to require transparency when third parties invest in lawsuits in return for a cut of any settlement or judgment. Litigation funding is a global industry, and the Wall Street Journal (WSJ) says it has “transformed into a billion dollar business.”

The U.S. Chamber Institute for Legal Reform (ILR) has long warned that the practice leads to more lawsuits, unnecessarily prolongs litigation, and undercuts plaintiffs’ control of a case. Indeed, an executive at one of the world’s largest litigation funders recently admitted to the WSJ, “We make it harder and more expensive to settle cases.” Wisconsin’s new law brings litigation funding out of the shadows, so that funders in the state can’t anonymously “pull the strings” of a lawsuit without other parties’ knowledge.

Skadden, Arps, Slate, Meagher & Flom LLP attorney and legal expert John Beisner testified on behalf of ILR in favor of AB 773 in the judiciary committees of both the state Assembly and Senate, respectively.

Despite efforts by allies of the plaintiffs’ bar to water down or derail AB 773 entirely, the new legal reform law represents a significant step forward in improving several other critical areas of Wisconsin’s civil justice system.

In particular, it updates the state’s discovery procedures and class action rules, and makes changes to how audits are performed on unclaimed property. AB 773 also sets reasonable rules for discovery of electronically stored information (ESI), a reform meant to reduce the soaring expenses associated with storing ever-growing quantities of ESI. 

AB 773’s enactment is timely. The 2017 Lawsuit Climate Survey that ILR released found that 85 percent of business leaders say a state’s lawsuit environment influences major business decisions, such as where to expand and hire. 

Wisconsin has had strong job growth over the past few years, and made significant strides in enacting legal reforms. Gov. Walker and the state legislature deserve credit for recognizing that improving Wisconsin’s civil justice system—and reaping the economic benefits that follow—is not a one-and-done effort, but a long-term commitment.