RALEIGH, N.C. – In a landmark bipartisan effort to protect the integrity of the state’s legal system, North Carolina today became the first state in the nation to prohibit third-party litigation investment (TPLI) with the enactment of House Bill 315. The bill, championed by the NC Chamber, passed nearly unanimously in the North Carolina General Assembly and was signed into law today by Gov. Josh Stein.

TPLI is a rapidly expanding, multibillion-dollar industry where outside investors fund lawsuits in exchange for an equity stake in the outcome. In addition to allowing outside investors to exercise undue influence over litigation, TPLI lacks transparency, can drive up already costly litigation expenses, and raises significant national security and intellectual property concerns. The new law bans the practice in North Carolina, helping preserve confidence in the state’s civil justice system.

“Today, North Carolina took a historic step to protect the integrity of its civil justice system and preserve the legal certainty that supports economic growth and investment across our state,” said Gary Salamido, president and CEO of the NC Chamber. “By becoming the first state in the nation to ban third-party litigation investment, North Carolina is further strengthening the competitive legal and business climate that has made our state one of the nation’s top places to live, work, and do business.”

Federal leaders and national advocacy organizations, including the U.S. Chamber of Commerce and the National Association of Manufacturers, have called on Congress to rein in TPLI. Other states have pursued legislation to increase transparency around the practice, but North Carolina is the first state in the nation to enact a law prohibiting TPLI.

“For too long, these outside groups have walked away with massive profits while families and local businesses have paid the price. We are grateful to North Carolina lawmakers for drawing a line against shadowy investors who bankroll litigation for profit, and the North Carolina Chamber for championing this critical reform. The state has joined the growing nationwide momentum calling for transparency in our civil justice system, and this effort to prohibit litigation funding raises the bar even higher,” said Stephen Waguespack, president of the U.S. Chamber Institute for Legal Reform.

“A strong legal climate is essential to North Carolina’s long-term competitiveness, which is why addressing third-party litigation investment has been a top priority for the business community and the NC Chamber Legal Institute,” said Chris Smith, a partner at Smith Anderson and board member of the NC Chamber Legal Institute. “Third-party litigation investment turns our courtrooms into financial investment markets, creating uncertainty and distortions within the civil justice system. This landmark law will ensure North Carolina’s courts remain focused on the fair administration of justice while preserving one of our state’s key competitive advantages.”

The NC Chamber thanks legislative leaders, particularly Sen. Buck Newton and former Rep. Sarah Stevens, for their work advancing this important legislation and their continued commitment to strengthening North Carolina’s competitiveness.

About NC Chamber: The NC Chamber works to research, develop, advocate, and communicate for solutions and policies that produce a nationally competitive business climate in North Carolina. For more information, visit ncchamber.com.