Once we learn the phrase “Georgia”, we hear it in our heads sung within the voice of the good Ray Charles. Really, we hear the whole lot of the opening lyrics to Georgia on My Thoughts. Is that simply us? Okay, effectively, anyhoo.
We have now been studying so much about Georgia of late due to final month’s enactment of tort reform, within the type of Georgia Senate Invoice 68 (a no-name Act) and Georgia Senate Invoice 69 (the “Georgia Courts Entry and Client Safety Act”), signed by Georgia’s Governor on April 21, 2025. There’s a lot for a medical system and pharmaceutical product legal responsibility lawyer to love.
The civil litigation procedural adjustments wrought by these payments embody:
- Trifurcation of Legal responsibility and Damages: Senate Invoice 68, Part 8 took impact with the Governor’s signature and applies to pending actions. It added O.C.G.A. § 51-12-15, which permits any social gathering in an motion for bodily damage or wrongful dying with greater than $150,000 at challenge to demand furcation of legal responsibility and damages. The preliminary, legal responsibility section contains apportionment of fault, if any. The second section, if mandatory, goes to the identical choose and jury, and determines compensatory damages. Then a 3rd section (once more to the identical choose and jury), if mandatory, determines points like punitive damages, attorneys’ charges, or prices which may be at challenge.
- Non-economic damages: Senate Invoice 68, Part 1 changed O.C.G.A. § 9-10-184, which now prohibits counsel from placing a quantity on non-economic damages till “after the shut of proof and on the time of [plaintiff’s] first alternative to argue the problem of damages.” As well as, the non-economic harm request have to be “rationally associated to the proof of noneconomic damages.” This one additionally took quick impact and applies to pending actions.
- Recoverable medical bills: Senate Invoice 68, Part 7 added O.C.G.A. § 51-12-1.1. For causes of motion arising on or after April 21, 2025, this part limits recoverable damages for “medical and healthcare bills” to their “cheap worth,” which is to be decided close to the quantity paid for these companies, not simply the quantity billed.
- Discovery about litigation-related medical care: Newly-added O.C.G.A. § 51-12-1.1 additionally makes “related and discoverable” details about whether or not medical care has been supplied below a “letter of safety” or different association the place fee to the supplier will likely be made out of a judgment or settlement. The related and discoverable info contains who referred the plaintiff to that supplier and the phrases of that settlement, in addition to details about any sale of the ensuing accounts receivable. This provision solely applies to “causes of motion arising on or after the efficient date of the Act”, particularly April 21, 2025.
- Discovery of litigation financing agreements: Senate Invoice 69, Part 4 amended O.C.G.A. § 11th of September-26 so as to add a brand new provision making discoverable “the existence and phrases and circumstances of any litigation financing settlement” for greater than $25,000. Mere disclosure of a litigation funding settlement doesn’t make that settlement admissible at trial…however on the identical time, the subsection is not to be construed “to restrict the admissibility of such info as proof of a celebration’s declare or protection.” This part grew to become efficient upon the Governor’s approval, however solely applies to “causes of motion commenced” or litigation funding “contracts entered into” on or after April 21, 2025.
The Georgia Courts Entry and Client Safety Act incorporates much more essential new legal guidelines, because it imposes substantial and complete regulation of third-party litigation funding/financing within the type of the newly-created O.C.G.A. Title 7, Chapter 10, principally efficient as of January 1, 2026.
First up are the definitions, together with what litigation financing is:
‘Litigation financing settlement’ or ‘litigation financing’ means an settlement wherein a litigation financier agrees to offer financing to a client or entity that’s or has standing to develop into a celebration to a civil motion, administrative continuing, authorized declare, or different authorized continuing looking for to recuperate financial damages, or to counsel for such client or entity, in trade for a proper to obtain fee, which proper is contingent the least bit on the result of such motion, declare, or proceedings by settlement, judgment, or in any other case, or on the result of any matter inside a portfolio that features such motion, declare, or proceedings and includes the identical authorized consultant or affiliated consultant.
O.C.G.A. § 7-10-1(10)(A).
Subsequent, O.C.G.A. § 7-10-2 requires any particular person “have interaction[d]in litigation financing in [Georgia]” to register as a “litigation financier”. If an entity is engaged in litigation funding, it should disclose “every individual that instantly or not directly owns, controls, holds with the facility to vote, or holds proxies representing 10 p.c or extra of the voting shares” of the entity, together with figuring out info and whether or not such individuals have any felony convictions throughout the previous 10 years for something apart from a misdemeanor visitors violation. Litigation financiers can’t be registered if they’re related to overseas governments, entities, or individuals designated by the US as overseas adversaries. Then O.C.G.A. § 7-10-9 makes violation of those registration necessities a felony punishable by as much as 5 years in jail and/or a $10,000 positive. That may be a requirement with some tooth!
Extra of the true substance is available in O.C.G.A. § 7-10-4, which explains what a litigation financier “shall not” do—together with train management over the proceedings or any settlement, or receive fee better than what the plaintiff recovers after charges and prices:
A litigation financier shall not:
(1) Direct, or make any selections with respect to, the course of any civil motion, administrative continuing, authorized declare, or different authorized continuing for which such litigation financier has supplied litigation financing, or any settlement or different disposition thereof
* * *
(2) Contract for, obtain, or recuperate, whether or not instantly or not directly, any quantity better than an quantity equal to the share of the proceeds collectively recovered by the plaintiffs or claimants in a civil motion, administrative continuing, authorized declare, or different authorized continuing looking for to recuperate financial damages financed by a litigation financing settlement after the fee of any legal professional’s charges and prices owed in connection to such motion, declare, or proceedings.
Different limitations within the Georgia Courts Entry and Client Safety Act embody prohibitions on litigation financiers paying or accepting referral charges, participating in false promoting, or looking for or acquiring waivers of treatments from these utilizing their litigation financing companies.
Nonetheless different provisions preclude litigation financiers from requiring shoppers of their companies to make use of particular suppliers of products and companies (equivalent to, for instance, explicit plaintiff’s legal professionals that the litigation financier prefers); forestall these concerned within the litigation (just like the plaintiff’s legal professionals) from having a monetary curiosity within the litigation financier; and preclude the task or securitization of most litigation financing agreements, amongst different restrictions.
Litigation financing agreements in Georgia additionally would require particular disclosures in 14 level daring sort:
IMPORTANT DISCLOSURES — PLEASE READ CAREFULLY
1. Proper to Cancellation: You, the buyer, or your authorized consultant could cancel this litigation financing settlement with out penalty or additional obligation inside 5 (5) enterprise days from the date you signal this contract or the date you obtain financing from the litigation financier, whichever date is later. You or your authorized consultant could cancel this litigation financing settlement by sending a discover of cancellation to the litigation financier and returning to the litigation financier any funds obtained from the litigation financier on the litigation financier’s most well-liked mailing deal with set forth on web page 1 of this contract.
2. The utmost quantity the litigation financier could obtain or recuperate from any contingent fee supplied for on this litigation financing settlement shall be not more than an quantity equal to the share of the proceeds collectively recovered by the plaintiffs or claimants in a civil motion, administrative continuing, authorized declare,or different authorized continuing looking for to recuperate financial damages financed by this litigation financing settlement after the fee of any legal professional’s charges and prices owed in connection to such motion, declare, or proceedings.
3. The litigation financier agrees that it has no proper to, and won’t demand, request, obtain, or train any proper to, affect, have an effect on, or in any other case make any resolution within the dealing with, conduct, administration, litigation, settlement, or decision of your civil motion, administrative continuing, authorized declare, different authorized continuing. All of those rights stay solely with you and your authorized consultant.
4. You, the buyer, should not required by the phrases of this litigation financing settlement to proceed to be represented by any explicit authorized consultant, and the litigation financing settlement doesn’t embody any proper for the litigation financier, any authorized consultant, or some other particular person to say or search to recuperate any evaluation, cost, price, penalty, or damages of any variety should you elect to alter authorized representatives at any time.
5. If there is no such thing as a restoration of any cash out of your civil motion, administrative continuing, authorized declare, or different authorized continuing, or if there may be not sufficient cash to fulfill in full the portion assigned to the litigation financier, you’ll not owe something in extra of your restoration.
6. You might be entitled to a totally accomplished litigation financing contract with no materials phrases or circumstances omitted previous to signing. Earlier than signing the litigation financing contract, or authorizing anybody to signal it in your behalf, it is best to learn the contract fully and seek the advice of an legal professional.
O.C.G.A. § 7-10-6
However that’s not all: O.C.G.A. § 7-10-5 places litigation financiers offering greater than $25,000 in funding on the hook for any prices or financial sanctions for frivolous litigation, and requires litigation financiers to indemnify funded plaintiffs and claimants for “any antagonistic prices, legal professional’s charges, damages, or sanctions which may be ordered or awarded towards such individuals in such motion.” Once more, this new regulation has some tooth!
Litigation funding, notably in private damage issues, will get talked about some, however motion is tougher to return by. For instance, the Advisory Committee on Civil Guidelines (to the Judicial Convention’s Committee on Guidelines of Apply and Process) has been considering whether or not some litigation funding measure is required on the federal stage, and in that case, whether or not a brand new federal rule of civil process requiring disclosure of litigation funding is the suitable answer. (See, for instance, the Committee’s October 2024 Agenda Ebook at 417-83, and correspondence from LCJ and the U.S. Chamber in assist of such a federal rule.)
Georgia’s two pronged method (regulation of litigation funders and litigation funding contracts, and disclosure within the type of the brand new O.C.G.A. § 11th of September-26, which permits for discovery into litigation funding) clearly goes additional than the disclosure-only options normally proposed. Certainly, as a result of the regulatory points of the brand new Georgia regulation apply to anybody in Georgia engaged in litigation funding and any litigation funding contracts in Georgia, these regulatory provisions will apply no matter whether or not a case is pending in state or federal courtroom in Georgia.
All in all, some huge adjustments, and the third social gathering litigation funding provisions put Georgia out within the lead on this challenge.
