花都影视

By Rafael P. McLaughlin, Esq.

Substitute House Bill 105 (HB 105) has passed the Ohio House and awaits the Governor’s expected signature. If enacted, it will create a comprehensive framework for regulating consumer legal funding and commercial litigation financing in Ohio. Consumer legal funding typically involves non-recourse advances to individual plaintiffs in exchange for a contingent share of any recovery, often to meet immediate non-legal expenses. Commercial litigation financing, by contrast, funds businesses, law firms, or other sophisticated parties pursuing high-value claims. Both support litigation, but they differ in participants, purposes, and structure.

For the defense of medical malpractice, personal injury, and commercial liability cases, HB 105’s significance lies chiefly in transparency, ethical safeguards, and new procedural requirements.

HB 105 would require consumer legal funding companies and commercial litigation financiers to register with the Ohio Attorney General before doing business in the state, including disclosures about leadership and affiliations. It also would require claimants’ counsel to disclose the existence and terms of consumer legal funding agreements to the Attorney General when the case resolves, with confidential information redacted. Those disclosures would become public, increasing transparency into litigation-funding practices.

The bill also sharply limits funders’ conduct. They could not influence counsel selection, litigation strategy, or settlement decisions, and they could not pay referral fees to attorneys or other professionals. These restrictions are aimed at preserving independent legal judgment and reducing conflicts of interest.

HB 105 also adds meaningful consumer protections. It would provide a 10-day cancellation period, cap service fees, and prohibit prepayment penalties. It also sets lien priority rules, giving liens created by consumer legal funding agreements priority over later-perfected liens, except those directly tied to the claim, such as attorney-fee and Medicaid liens.

For attorneys, the bill reinforces core ethical limits. Counsel could not disclose privileged information to funders without client consent and would remain bound by the Rules of Professional Conduct. Attorneys with a financial interest in a funding company also could not represent clients in matters involving that company.

For the defense bar, the bill’s implications are substantial. Most notably, mandatory disclosure of funding agreements would give defense counsel a clearer view of the financial interests behind a claim, informing settlement posture and trial strategy. Regulation may also discourage some speculative claims supported by third-party funding. And the bill’s ethical guardrails help ensure malpractice cases are litigated on their merits rather than shaped by outside financial pressure.

Still, the law presents complications. Disclosure and compliance obligations may add administrative burden, especially where multiple funding agreements exist. The lien-priority provisions could complicate settlement distributions in cases involving significant medical or statutory liens. And because funding would remain available, some claimants may be better able to sustain cases that otherwise would have been economically impractical, potentially increasing defense costs.

With the Governor’s signature expected, medical, hospital, business, and commercial clients – and the lawyers who defend them – should begin preparing now. The period before enactment is an opportunity to review current cases for signs of third-party funding and to develop strategies for the disclosure and procedural issues the law will introduce. HB 105 marks a significant change in Ohio litigation practice, and early preparation will allow the defense side to make the most of its transparency provisions.

If you have any questions about Ohio HB 105, please contact one of 花都影视's Medical Malpractice, Health Care, Business and Commercial Litigation, or Corporate & General Business lawyers.