Florida’s Litigation Investment Safeguards and Transparency Act: A Critical Analysis of SB 1396 and Its Impact on Litigation Funding, Patent Enforcement, and Plaintiffs' Access to Justice

I. Introduction

On February 10–11, 2026, the Florida Senate Rules Committee advanced CS for SB 1396, the “Litigation Investment Safeguards and Transparency Act” (“LISTA” or the “Act”), sponsored by Senator Colleen Burton (R-Lakeland). The bill, which cleared its final committee stop and now heads to the full Florida Senate, would create Part II of Chapter 69 of the Florida Statutes, establishing for the first time a comprehensive regulatory framework governing litigation financing agreements in the State of Florida.

Unlike the federal Litigation Funding Transparency Act of 2026 introduced just one day later by Senator Grassley and others—which targets only MDL proceedings, class actions, and large coordinated proceedings in federal court—Florida’s LISTA operates on a fundamentally different and, in critical respects, broader canvas. The Act imposes substantive restrictions on litigation financier conduct across all civil actions, administrative proceedings, and legal proceedings in Florida, regardless of case type or size. Its foreign funder disclosure provisions reach every case in which a foreign person, foreign principal, or sovereign wealth fund is involved in funding—from a single-plaintiff personal injury claim to the largest commercial dispute.

Proponents describe the Act as a consumer protection measure that does not ban litigation financing or contingency fee arrangements but merely establishes guardrails for what they characterize as “a fast-growing, billion-dollar industry” that has attracted foreign investors, including Chinese-backed entities. Opponents counter that the Act’s disclosure requirements and substantive prohibitions would disadvantage individual plaintiffs challenging corporate defendants and chill legitimate funding relationships essential to access to justice.

This article provides a detailed analysis of the Act’s provisions, examines the types of cases and parties affected, assesses the Act’s implications for patent litigation and plaintiff access to justice, and identifies the significant negative consequences that would flow from its enactment.

II. Summary of the Act

SB 1396 creates five new statutory sections within Part II of Chapter 69 of the Florida Statutes: Sections 69.101 (Definitions), 69.103 (Litigation Financing Agreement; Representation of Client Interests), 69.105 (Prohibited Conduct), 69.107 (Transparency for Foreign Litigation Financiers), and 69.109 (Violations; Enforcement). The Act would take effect July 1, 2026, with foreign funder disclosure requirements applying retroactively to proceedings pending on that date.

A. Key Definitions

The Act defines “litigation financing agreement” broadly as any transaction in which a litigation financier agrees to provide financing to a party, attorney, or law firm representing a party in a civil action, administrative proceeding, claim, or other legal proceeding in exchange for a right to receive payment contingent in any respect on the outcome of such proceeding—or on the outcome of any matter within a portfolio that includes such proceeding and involves the same counsel or affiliated counsel. This portfolio-level language is significant: it captures not only case-specific funding arrangements but also portfolio funding structures in which a funder’s return is tied to the aggregate outcome of multiple related cases handled by the same counsel.

The definition of “litigation financier” is straightforward: any person engaged in the business of providing litigation financing. The term “foreign funder” encompasses any foreign person, foreign principal, or sovereign wealth fund that provides funding directly or indirectly under a litigation financing agreement. “Foreign person” is defined as any person or entity that is not a U.S. citizen, lawful permanent resident, a U.S.-incorporated corporation, or an unincorporated association with a majority of U.S. citizen or permanent resident members. “Foreign principal” captures foreign governments, their officials, political subdivisions, political parties, and entities organized under foreign laws or with principal places of business abroad whose ownership is held by foreign government actors. “Sovereign wealth fund” means an investment fund owned or controlled by a foreign principal or its agent.

B. Exemptions from the Definition of Litigation Financing

The Act carves out several categories of arrangements from its definition of “litigation financing agreement.” These exemptions are broader and more carefully articulated than those in the federal LFTA and reflect an effort to insulate certain common financial arrangements from the Act’s regulatory reach.

Here are the exceptions:

1. Agreements providing funds for a party’s personal living expenses during the pendency of litigation, provided such funds are not used to finance litigation or legal costs.

2. Contingency fee arrangements and attorney cost-advancement agreements that comply with the Florida Rules of Professional Conduct or equivalent rules in the attorney’s licensing jurisdiction.

3. Entities with preexisting contractual obligations to indemnify or defend a party—a provision that effectively excludes insurance companies and contractual indemnitors from the Act’s reach.

4. Health insurers paying or obligated to pay sums for an injured person’s health care.

5. Financial institution loans where repayment is not contingent on the outcome of litigation.

6. Funding provided to 501(c)(3) nonprofit organizations for pro bono legal representation that does not seek punitive damages, with a provision allowing the nonprofit to receive repayment not exceeding the amount of funding provided, contingent on the litigation outcome.

7. Funding provided by 501(c)(3) nonprofit organizations for pro bono legal representation that does not seek punitive damages, with a provision allowing the nonprofit to receive repayment not exceeding the amount of funding provided, contingent on the litigation outcome.

8. Funding provided in a foreign class action lawsuit where the U.S.-domiciled party is a class member.

These exemptions are notable for what they accomplish: they explicitly protect contingency fee arrangements, insurance defense, institutional lending, and nonprofit public interest litigation from the Act’s reach. This is a meaningful distinction from the federal LFTA, which does not include comparable exemptions for contingency fee arrangements or insurance-based defense funding.

C. Court Consideration of Funding Agreements in Class Actions and Consolidated Proceedings

Section 69.103 authorizes—but does not require—courts to take the existence of a litigation financing agreement into account in two specific contexts: (1) in class action lawsuits, when determining whether a class representative or class counsel would adequately and fairly represent the interests of the class; and (2) in consolidated actions involving common questions of law or fact, when determining whether lead counsel or co-lead counsel would adequately and fairly represent the interests of the parties.

This provision introduces litigation funding as a factor in the adequacy analysis under Florida’s class action rules, potentially giving defendants a new basis to challenge class certification or counsel appointments by arguing that a funder’s financial interest creates a conflict with the class members’ interests. While the provision is permissive rather than mandatory, it signals legislative intent to treat the existence of a funding arrangement as relevant to the adequacy inquiry—a position that, if adopted by Florida courts, could create significant obstacles for funded class actions.

D. Prohibited Conduct

Section 69.105 establishes five substantive prohibitions on litigation financier conduct. These prohibitions apply to all litigation financing arrangements in Florida, regardless of whether the funder is domestic or foreign, and regardless of the type or size of the case.

First, a litigation financier may not direct or make any decisions regarding the course of any civil action, administrative proceeding, claim, or other legal proceeding for which it has provided financing, including decisions regarding the appointment or changing of counsel, the choice or use of expert witnesses, litigation strategy, and settlement or other disposition. All such decisions remain solely with the parties and their counsel of record. This prohibition is broadly worded and, like its federal counterpart, introduces significant ambiguity regarding the permissible scope of funder involvement in case evaluation, milestone discussions, and continued funding decisions.

Second, a litigation financier may not contract for or receive, directly or indirectly, a larger share of the proceeds than the share collectively recovered by the plaintiffs after payment of attorney fees and costs. This provision effectively caps a funder’s return at the plaintiffs’ net recovery—a significant constraint on funding economics that does not exist under the federal LFTA or in most other jurisdictions.

Third, a litigation financier may not pay or offer to pay commissions, referral fees, or other consideration to any person—including attorneys, law firms, or health care practitioners—for referring a person to the financier. This anti-solicitation provision targets the practice of attorney or medical provider referral networks that channel potential litigants to specific funders.

Fourth, a litigation financier may not assign or securitize a litigation financing agreement, in whole or in part. This prohibition prevents funders from packaging and selling their litigation investments to secondary market participants—a restriction that directly constrains the liquidity and capital efficiency of the litigation funding industry.

Fifth, a litigation financier may not be assigned rights to or in any legal proceeding for which it provided financing, other than the right to receive a share of the proceeds pursuant to the funding agreement. This reinforces the principle that funders are passive investors, not parties to the litigation.

E. Foreign Funder Disclosure Requirements

Section 69.107 establishes mandatory disclosure requirements specifically targeting foreign-connected litigation funding. If a party to any civil action, administrative proceeding, claim, or other legal proceeding 'filed in the United States' — or that party's counsel of record — has entered into a litigation financing agreement with a foreign person, foreign principal, or sovereign wealth fund, the party or counsel must, within 14 days after execution of the agreement or within 7 days after filing the action (whichever occurs first), file and serve a notice identifying:: (a) the existence of the funding relationship; (b) the foreign entity by legal name and jurisdiction of organization; and (c) each foreign person, foreign principal, or sovereign wealth fund that directly or indirectly owns or controls 3 percent or more of the capital, equity, or other beneficial ownership interests in the litigation financier, including the legal name, address, and citizenship or country of incorporation or registration.

The statutory phrase 'filed in the United States' is significant and should not be overlooked. Section 69.103, which addresses the court's authority to consider funding agreements in the class adequacy analysis, uses the narrower phrase 'brought in the courts of this state' — limiting that provision to Florida state courts. The drafters' deliberate use of 'filed in the United States' in Section 69.107 rather than 'filed in the courts of this state' confirms that the foreign funder disclosure requirements are intended to reach proceedings in federal court as well as state court. This distinction has critical implications for patent infringement actions, which are within the exclusive jurisdiction of the federal courts but would be subject to the Act's foreign funder disclosure requirements when filed in federal districts within Florida.

This notice must be filed with the court, agency, or tribunal, served on all parties, and provided to the Florida Department of Financial Services and the Office of the Attorney General. Critically, the Act expressly provides that the dollar amounts, financing terms, and other proprietary or trade secret information contained in or related to the litigation financing agreement are not required to be disclosed. The court may also order that the notice or supporting documentation be filed under seal and issue protective orders to safeguard proprietary or confidential information.

The Act also prohibits foreign litigation financiers or persons acting on their behalf from: (a) using a domestic entity or affiliate to conceal or evade the disclosure requirements; and (b) receiving, transmitting, or sharing proprietary, privileged, or national security-related information obtained through litigation financing with any foreign person, foreign principal, or sovereign wealth fund not a party or attorney to the action.

The disclosure requirements apply to any litigation financing agreement in which a foreign person, foreign principal, or sovereign wealth fund has provided or will provide funds—directly or indirectly—amounting to 5 percent or more of the funds the financier has provided or is committed to provide under the agreement. This 5 percent threshold ensures that even minority foreign investment in a litigation funding entity can trigger disclosure obligations.

F. Enforcement and Remedies

Section 69.109 establishes a multi-layered enforcement regime. A litigation financing agreement executed in violation of the Act is void and unenforceable. Violations of the prohibited conduct provisions under Section 69.105 constitute deceptive and unfair trade practices actionable under Part II of Chapter 501 of the Florida Statutes—the Florida Deceptive and Unfair Trade Practices Act (“FDUTPA”). Courts, agencies, and tribunals of competent jurisdiction may impose fines or other sanctions for violations of the foreign funder disclosure requirements under Section 69.107. Notably, the Act expressly provides that Section 69.107 does not create a private cause of action.

G. Applicability and Effective Date

The Act takes effect July 1, 2026. The substantive provisions governing prohibited conduct apply to litigation financing agreements entered into on or after that date. The foreign funder disclosure requirements, however, apply retroactively to any proceeding pending on or commenced after July 1, 2026. Parties to pending proceedings who would have been required to make a disclosure had the Act been in effect at the time the relevant action occurred must make the disclosure by July 31, 2026, or face sanctions.

III. Types of Cases and Parties Affected

The scope of Florida’s LISTA differs fundamentally from the federal LFTA, and understanding this distinction is essential to evaluating the Act’s impact.

A. The Act’s Prohibited Conduct Provisions Apply to All Funded Litigation in Florida

Unlike the federal LFTA—which limits its disclosure regime to MDL proceedings, class actions, and consolidated proceedings of 100 or more actions—Florida’s prohibited conduct provisions under Section 69.105 apply to every civil action, administrative proceeding, claim, or other legal proceeding in which a litigation financing agreement exists. There is no case-type limitation, no minimum case threshold, no restriction to particular categories of litigation, and no limitation to Florida state courts. The prohibited conduct provisions use the generic phrase 'civil action, administrative proceeding, claim, or other legal proceeding' without specifying any court system. This stands in deliberate contrast to Section 69.103, which specifically limits the court's authority to consider funding agreements in the class adequacy analysis to class actions 'brought in the courts of this state.' The absence of any comparable limiting language in Section 69.105 indicates that the prohibited conduct provisions were drafted to reach funded litigation in any forum, including federal court

This means the Act’s substantive restrictions—including the prohibition on funder decision-making, the cap on funder recovery, the anti-solicitation provision, and the prohibition on assignment or securitization—apply equally to a single-plaintiff automobile accident case, a complex commercial dispute, a medical malpractice action, a product liability claim, an employment discrimination lawsuit, a real estate dispute, a construction defect case, an insurance coverage action, an insurance coverage action, and — critically — a patent infringement action filed in federal court within Florida, because the Act regulates the financing relationship rather than the underlying substantive claims, and therefore does not conflict with exclusive federal patent jurisdiction.. The breadth of this application is extraordinary and reflects a fundamentally different legislative approach from the federal bill.

B. Foreign Funder Disclosure Covers Every Case Filed in the United States by Florida-Based Parties

The foreign funder disclosure requirements under Section 69.107 are universal in scope and, critically, extend beyond Florida state courts. The statute applies to any party or counsel of record in 'any civil action, administrative proceeding, claim, or other legal proceeding filed in the United States' who has entered into a litigation financing agreement with a foreign person, foreign principal, or sovereign wealth fund. The deliberate use of 'filed in the United States' — rather than the narrower 'brought in the courts of this state' used in Section 69.103 — confirms that the disclosure requirements reach federal court proceedings, including patent infringement actions, securities fraud cases, antitrust litigation, and any other federal action in which a Florida-based party or attorney has a foreign-connected funding arrangement. There is no limitation to class actions, MDLs, or large-scale proceedings.

This scope captures an enormous range of litigation. Personal injury actions, medical malpractice claims, wrongful death suits, product liability cases, commercial contract disputes, insurance coverage actions, construction litigation, real estate disputes, employment claims, civil rights actions, environmental litigation, intellectual property disputes—if the case is filed in any court in the United States by a party or attorney subject to Florida's regulatory authority and involves a foreign-connected funder, the disclosure obligations apply. Given Florida’s status as one of the nation’s largest and most active litigation jurisdictions, the volume of affected cases could be substantial.

Yes, that means on its face, the LISTA purports to apply to patent litigation.

C. The Class Action and Consolidated Proceeding Provisions

Section 69.103’s provisions authorizing courts to consider funding agreements in the class adequacy analysis apply specifically to class actions and consolidated proceedings in Florida courts. This provision primarily affects consumer class actions, securities class actions filed in state court, insurance class actions, employment class actions, and any consolidated mass action proceeding where lead counsel is appointed. The introduction of litigation funding as a factor in the adequacy determination could create new obstacles for class certification and counsel appointment in these cases.

D. The Exemption Structure Defines Who Is Not Affected

The Act’s exemptions define a significant category of arrangements and parties that fall outside its scope. Contingency fee attorneys, insurance companies fulfilling preexisting indemnity or defense obligations, health insurers paying medical claims, financial institutions making non-contingent loans, and 501(c)(3) nonprofit organizations providing pro bono representation are all exempt. These exemptions are broader than those in the federal LFTA and reflect a deliberate effort to shield traditional legal fee arrangements and insurance-based defense funding from the Act’s reach.

The insurance and indemnity exemption is particularly significant. Corporate defendants whose litigation costs are funded by insurers, contractual indemnitors, or parent companies face no obligations under the Act. This creates the same fundamental (and hypocritical) asymmetry present in the federal bill: plaintiffs who rely on third-party litigation funding are subject to regulation, while defendants whose litigation is funded by economically interested third parties are not.

IV. Comparison with the Federal Litigation Funding Transparency Act of 2026

Understanding the differences between Florida’s LISTA and the federal LFTA is critical for practitioners, funders, and litigants operating in both jurisdictions.

A. Scope

The federal LFTA applies only to MDL proceedings, class actions, and consolidated proceedings of 100 or more actions in federal court. Florida's LISTA applies to all civil actions, administrative proceedings, and legal proceedings regardless of case type or size. Moreover, Section 69.107's foreign funder disclosure requirements extend to proceedings 'filed in the United States' — not merely proceedings filed in Florida state courts — meaning the Act's disclosure obligations may reach any federal action in which a Florida-based party or attorney has a foreign-connected funding arrangement. In this respect, while the federal LFTA is limited to specific case types but applies uniformly across all federal courts, Florida's Act applies to all case types but extends its reach into federal court through the regulation of funding relationships involving Florida-connected parties. The combined effect is that Florida's Act is dramatically broader in reach, particularly for parties and attorneys based in or operating from Florida.

B. Disclosure Requirements

The federal LFTA requires disclosure of funder identity and production of the complete funding agreement—including all financial terms—to the court and all opposing parties. Florida’s LISTA, by contrast, limits its mandatory disclosure requirements to foreign-connected funders and expressly protects dollar amounts, financing terms, and proprietary information from disclosure. In this respect, Florida’s approach is more protective of funder and plaintiff interests.

This distinction is substantial. Under the federal bill, a defendant would receive the plaintiff’s complete funding agreement, including the funder’s expected return, the total funding commitment, milestone provisions, and walk-away triggers. This gives the defendant a blueprint to destroy the case. Under Florida’s Act, the defendant would learn only the identity of a foreign funder, its jurisdiction, and its ownership structure—not the economics of the deal. For domestic funders in Florida, no disclosure to opposing parties is required at all.

C. Substantive Conduct Restrictions

Florida’s LISTA goes significantly further than the federal LFTA in regulating funder conduct. The federal bill prohibits funder “influence, control, or discretion” over litigation strategy and settlement.

Florida’s Act adds: a cap on funder recovery at the plaintiffs’ net recovery, a prohibition on referral fees and commissions, a prohibition on assignment or securitization of funding agreements, and a prohibition on assignment of rights in the underlying proceeding. These additional restrictions fundamentally reshape the economics and structure of litigation funding in Florida.

Regarding the cap on fee recovery, Section 69.105(2) prohibits a litigation financier from contracting for or receiving, whether directly or indirectly, "a larger share of the proceeds of any civil action, administrative proceeding, claim, or other legal proceeding financed by a litigation financing agreement than the share of the proceeds collectively recovered by the plaintiffs to any such action, claim, or proceeding after the payment of any attorney fees and costs owed in connection to such action, claim, or proceeding."

In practical terms, this provision establishes a statutory ceiling on a funder's return: the funder's total recovery — including both the return of invested capital and any profit — may not exceed the amount that the plaintiffs collectively take home after their attorneys have been paid. To illustrate, if a case settles for $10 million and attorney fees and costs consume $4 million, the plaintiffs' collective net recovery is $6 million. Under Section 69.105(2), the funder's total return — regardless of what the funding agreement provides — is capped at $6 million. In cases where the funding investment is large relative to the expected recovery, or where attorney fees consume a significant percentage of the gross recovery, this cap may render the risk-return profile unacceptable to funders.

High-risk cases with modest expected recoveries — precisely the cases where plaintiffs most need external funding — become economically unfundable because the statutory cap prevents the funder from earning a return commensurate with the risk undertaken. This provision has no analogue in the federal Litigation Funding Transparency Act of 2026, which imposes disclosure obligations but does not regulate the economic terms of funding arrangements. Florida's approach represents a direct legislative intervention into the pricing of litigation risk — a function traditionally left to private contract and market forces. It would be a major blow to injured plaintiffs because many cases would not be fundable under the Act.

D. Enforcement

Both bills provide for sanctions, but the enforcement mechanisms differ. The federal LFTA grafts its disclosure requirements onto Rule 26(a) and subjects noncompliance to Rule 37 sanctions. Florida’s LISTA renders violating agreements void and unenforceable, treats prohibited conduct violations as actionable under the Florida Deceptive and Unfair Trade Practices Act, and authorizes courts to impose fines and other sanctions for foreign funder disclosure violations. The Florida approach is arguably more severe, as voiding the funding agreement entirely eliminates the funder’s right to any return on its investment.

V. Impact on Patent Litigation

The Act’s implications for patent litigation in Florida require careful analysis.

A. Patent Cases in Federal Court Are Directly Affected

Patent infringement actions under federal law are within the exclusive jurisdiction of the federal courts. However, this does not place them beyond the reach of Florida's LISTA. The Act regulates the conduct of litigation financiers and the disclosure obligations of parties and counsel — not the substantive patent claims themselves. Because the Act targets the financing relationship rather than the underlying cause of action, it does not conflict with exclusive federal patent jurisdiction any more than state bar ethics rules or state contract law conflict with federal jurisdiction over the claims those attorneys litigate.

Section 69.107's foreign funder disclosure requirements expressly apply to proceedings 'filed in the United States,' and the deliberate use of this phrase — in contrast to the narrower 'courts of this state' language in Section 69.103 — confirms that patent infringement actions filed in the Middle District of Florida, the Southern District of Florida, or the Northern District of Florida are within the Act's disclosure reach if the party or counsel has entered into a litigation financing agreement with a foreign person, foreign principal, or sovereign wealth fund. Given the significant and growing role of foreign-connected litigation funders in patent enforcement, this provision will directly affect a meaningful number of patent cases.

Section 69.105's prohibited conduct provisions — including the prohibition on funder decision-making, the cap on funder recovery, the prohibition on securitization, and the anti-referral provision — use generic language ('civil action, administrative proceeding, claim, or other legal proceeding') with no court-system limitation. A strong argument exists that these provisions apply to litigation financing agreements covering federal patent cases as well, particularly where the funder, the funded party, or counsel is based in Florida and therefore subject to the state's regulatory authority.

In addition to federal patent infringement actions, patent-adjacent litigation filed in Florida state court is also directly affected. This includes trade secret misappropriation claims under the Florida Uniform Trade Secrets Act, breach of patent license agreements, patent assignment disputes, fraud claims arising from patent transactions, and other state-law causes of action that frequently accompany or arise from patent-related disputes. Both the prohibited conduct provisions and, where applicable, the foreign funder disclosure requirements apply to these state-court proceedings.

B.Indirect Effects on Patent Enforcement Beyond Florida

Beyond the Act's direct application to funded patent cases in Florida's federal and state courts, the indirect effects of LISTA on the broader litigation funding market will also be significant. Florida is one of the nation’s largest and most active litigation jurisdictions. If the Act’s substantive restrictions—particularly the cap on funder recovery, the prohibition on securitization, and the voiding of noncompliant agreements—reshape how funders structure their investments in Florida, those structural changes will ripple into the broader funding market, including the market for patent litigation funding in federal court.

The prohibition on securitization is particularly significant. Many litigation funders finance their operations in part by securitizing portfolios of funded cases—packaging and selling interests in those portfolios to institutional investors. If Florida prohibits this practice, funders operating in the state will face constrained access to capital, potentially reducing the total pool of funding available for all types of litigation, including patent enforcement actions.

Similarly, the cap on funder recovery at the plaintiffs’ net proceeds fundamentally alters the risk-return calculus for funded litigation. Patent cases with high expected returns—which are precisely the cases that attract litigation funding—would become less attractive to funders if their upside is capped. This pricing constraint, if applied broadly, would reduce funder appetite for patent cases and increase the cost of capital for patent owners.

VI. Negative Consequences of the Act

A. The Funder Recovery Cap Distorts Funding Economics and Reduces Access to Capital

Section 69.105(2)’s requirement that a funder may not receive a larger share of proceeds than the plaintiffs’ collective net recovery represents a significant intrusion into the economics of litigation funding. Litigation funding is a high-risk investment: funders deploy capital years in advance of any potential return, with no guarantee of recovery. The returns that compensate for this risk are set by the market and reflect the probability of success, the time horizon of the investment, and the magnitude of the potential recovery.

By capping the funder’s return at the plaintiffs’ net recovery, the Act eliminates the ability of funders to price risk appropriately in cases where the litigation risk is high but the potential recovery is modest relative to the investment required. Funders will respond by declining to fund cases that do not meet the return threshold imposed by the cap, leaving meritorious claims—particularly smaller cases with significant risk—unfunded and unenforced.

B. The Prohibition on Securitization Constrains Capital Formation

Section 69.105(4)’s prohibition on assigning or securitizing litigation financing agreements eliminates a critical capital formation mechanism for the litigation funding industry. Securitization allows funders to recycle capital by selling interests in funded portfolios to institutional investors, freeing up resources to fund additional cases. Without this mechanism, funders must rely entirely on their own balance sheets and direct investor commitments to finance their operations.

This restriction will reduce the total amount of capital available for litigation funding in Florida, with predictable consequences for plaintiffs: fewer funders willing to invest, more conservative underwriting, and higher costs of capital. The restriction also creates a competitive disadvantage for Florida-based funders relative to funders in jurisdictions that permit securitization, potentially driving funding activity out of the state.

C. The Prohibited Conduct Provisions Introduce Ambiguity and Invite Satellite Litigation

Section 69.105(1)’s prohibition on funder decision-making introduces the same ambiguity present in the federal LFTA’s “litigation integrity” provision. The line between a funder’s legitimate evaluation of case developments and impermissible “direction” of litigation strategy is inherently unclear. Funders necessarily discuss case milestones, evaluate settlement opportunities, and make decisions about continued investment based on the progress of the case. Under the Act’s broadly worded prohibition, defendants could characterize any such communication as a violation, generating motions practice, discovery disputes, and satellite litigation that increases costs and delays resolution.

The consequences of a finding of prohibited conduct are severe: the funding agreement is rendered void and unenforceable, and the violation constitutes a deceptive and unfair trade practice under FDUTPA. This enforcement regime creates enormous risk for funders and could deter funding activity in Florida altogether.

D. The Anti-Referral Provision May Disrupt Legitimate Relationships

Section 69.105(3)’s prohibition on paying commissions, referral fees, or other consideration to any person—including attorneys, law firms, and health care practitioners—for referring persons to the financier targets a specific practice that legislators consider problematic. However, the provision’s breadth could disrupt legitimate business relationships between funders and the attorneys and firms that identify potential funding opportunities. If a law firm cannot receive any consideration for introducing a client to a funder, the firm has diminished incentive to facilitate the relationship—potentially reducing the number of cases that receive funding, particularly smaller cases where the plaintiff or attorney may not independently know that litigation funding is available.

E. The Foreign Funder Disclosure Regime, While More Measured, Still Carries Risks

Florida’s foreign funder disclosure provisions are more carefully tailored than the federal LFTA’s in several respects: they expressly protect financial terms and proprietary information from disclosure, they permit courts to seal filings and issue protective orders, and they do not require public reporting on a government website. These protections mitigate some of the most damaging aspects of the federal approach.

Nevertheless, the disclosure of foreign funder identity and ownership structure to all parties, the Department of Financial Services, and the Attorney General’s office still carries risks. The 3 percent ownership threshold for disclosure is notably low and will capture many investment entities with diffuse international ownership that poses no legitimate national security concern. Allied nations’ pension funds, European and Australian litigation funders, and multinational investment firms with minority foreign shareholders would all be subject to disclosure alongside entities with genuinely problematic foreign government connections.

The 5 percent threshold for triggering disclosure obligations based on indirect foreign funding is similarly low and could capture funders whose foreign-sourced capital is a minor component of their overall operations. The combined effect of these low thresholds is to cast a wide net that captures far more entities than those posing genuine national security or foreign influence risks.

F. Retroactive Application Disrupts Existing Arrangements

The Act’s retroactive application of foreign funder disclosure requirements to proceedings pending on July 1, 2026—with a compliance deadline of July 31, 2026—raises concerns similar to those present in the federal LFTA. Funding agreements currently in effect were negotiated without any expectation of disclosure to opposing parties, courts, or state agencies. The compressed 30-day compliance window for pending proceedings gives parties and funders minimal time to evaluate the disclosure obligations, seek protective orders where appropriate, and determine whether existing agreements can accommodate the new requirements.

Funders with confidentiality concerns may choose to terminate agreements rather than comply, potentially disrupting ongoing litigation to the detriment of the funded party.

G. The Asymmetry Problem Persists

Despite the Act’s more measured approach to disclosure, the fundamental asymmetry identified in the federal LFTA persists in Florida’s LISTA. The exemption for entities with preexisting contractual obligations to indemnify or defend a party—Section 69.101(6)(c)—ensures that insurance companies, contractual indemnitors, and parent companies funding a defendant’s litigation are not subject to the Act’s requirements. Meanwhile, third-party funders who provide capital to plaintiffs are subject to the full range of prohibited conduct provisions, voiding of noncompliant agreements, and FDUTPA liability.

This asymmetry is not accidental. Insurance companies and corporate indemnitors fund the defense side of litigation on a scale that dwarfs the plaintiff-side litigation funding industry. By exempting these arrangements while regulating plaintiff-side funding, the Act tilts the playing field in favor of defendants—the very parties who already enjoy significant resource advantages in most litigation.

VII. Positive (or at Least Less-Negative) Aspects of the Act

Notwithstanding the foregoing concerns, the Act contains several provisions that represent improvements over the federal approach and reflect legitimate policy objectives.

The express protection of financial terms and proprietary information from disclosure is a meaningful safeguard that prevents opposing parties from exploiting funding disclosures for strategic advantage.

The authorization for courts to seal filings and issue protective orders provides additional flexibility. The exemption of contingency fee arrangements and nonprofit public interest litigation from the Act’s scope preserves important mechanisms for access to justice.

The prohibition on funders receiving more than the plaintiffs’ net recovery, while constraining funding economics, does address a legitimate concern that funders should not profit at the expense of the clients whose claims generated the recovery.

Additionally, the Act’s anti-evasion provision—prohibiting foreign funders from using domestic entities to conceal their involvement—and its prohibition on the transmission of proprietary, privileged, or national security-related information to foreign entities address genuine concerns about foreign exploitation of the U.S. litigation system that are not effectively addressed by the federal LFTA.

VIII. Conclusion

Florida’s Litigation Investment Safeguards and Transparency Act represents a more nuanced approach to litigation funding regulation than the federal LFTA, but it is not without significant flaws. The Act’s prohibited conduct provisions—particularly the recovery cap, the securitization prohibition, and the anti-referral provision—impose substantive constraints on the litigation funding industry that will reduce the availability and increase the cost of funding for plaintiffs across every category of litigation in Florida. The ambiguity of the funder decision-making prohibition will generate satellite litigation that increases costs and delays for the very parties the Act purports to protect.

While the Act’s foreign funder disclosure provisions are more carefully tailored than the federal approach—protecting financial terms from disclosure and permitting courts to seal filings—the low ownership thresholds and broad definition of “foreign person” will capture many legitimate funders alongside those posing genuine national security concerns. The retroactive application to pending proceedings compounds these risks.

For patent practitioners, the Act's impact is both direct and indirect. Section 69.107's foreign funder disclosure requirements expressly reach proceedings 'filed in the United States,' bringing federal patent infringement actions within the Act's disclosure regime. Section 69.105's prohibited conduct provisions, which contain no court-system limitation, may extend to funding arrangements covering federal patent cases where the funder, party, or counsel is subject to Florida's regulatory authority. State-court patent-adjacent claims — including trade secret, licensing, and assignment disputes — are covered as well. Beyond these direct effects, the Act's securitization prohibition and recovery cap will constrain the broader litigation funding market, reducing the availability and increasing the cost of funding for patent enforcement nationwide.

Florida’s LISTA, like the federal LFTA, ultimately raises a fundamental question: whether transparency and consumer protection objectives can be achieved without undermining the access to justice that litigation funding exists to provide. As currently drafted, the Act falls short of that balance.