The Ban That Wasn’t: Ohio’s New Litigation-Funding Law

Ohio Governor Mike DeWine signed HB 105 in July and the coverage called it a foreign-funder ban. It isn’t one. It’s a licensing regime for the whole industry with a single real prohibition attached — and that prohibition, a look-through test on where a fund’s capital came from, is now law in six states. Nothing takes effect until October 6, which makes this a compliance runway rather than a headline.

I hold commitments to commercial litigation finance funds. That’s my only door into this asset class now, so a state law that determines whether those funds can keep writing deals in a given venue is an underwriting question for me, not a policy debate. The question I actually needed answered about HB 105 was narrow: after October 6, can a fund I’m in finance an Ohio case, and what does it cost to be allowed to?

The answer turns out to be yes, with paperwork — unless the fund’s own investor base includes foreign capital, in which case the answer may be no. That’s a very different statute from the one the headlines described.

What the Statute Actually Is

HB 105 enacts an entire new chapter of the Ohio Revised Code — sections 1357.01 through 1357.10 — and repeals the state’s older, thinner provision on the subject. Calling it a ban describes one of its ten sections. The rest is a licensing and consumer-protection regime, and it applies to commercial financiers and consumer funders alike.

Statute	HB 105 — Ohio Rev. Code ch. 1357 (§§ 1357.01–.10)
Signed	July 7, 2026, by Gov. Mike DeWine
Effective	October 6, 2026 — not yet in force as of this writing
Regulator	Ohio Attorney General — registration, post-resolution filing, enforcement
Sponsor framing	“The business of nonrecourse litigation funding has operated without guidelines for too long” — Rep. Meredith Craig (R-Smithville)

Sorted by what they’d actually cost a funder to comply with, the pieces look like this:

Provision	What it does
Registration	No commercial financier or consumer funder may do business in Ohio without registering with the Attorney General first. This is the gate; everything else assumes you’re through it.
§ 1357.06 — foreign capital	No funder may enter an agreement respecting a claim financed, directly or indirectly, by anyone “not domiciled in the United States.” The only genuine prohibition in the chapter.
§ 1357.07 — conduct	Bars any funder, foreign or domestic, from influencing strategy or settlement, and bars counsel from sharing sealed or protected discovery material with a commercial financier.
Post-resolution filing	Funding agreements go to the Attorney General once a case ends, and become public at that point — a database of closed-case agreements.
Consumer terms	Caps on consumer funder fees and charges, a ten-day right to cancel, itemized cost disclosure, and a ban on referral fees or commissions between funders, attorneys and healthcare providers.
Lien priority	A funding agreement creates a lien on claim proceeds that generally takes priority over later liens.

Nothing in that list stops a fund with domestic capital from financing an Ohio case. It stays legal: registered, constrained in conduct, and filed with the Attorney General once it’s over.

The One Prohibition, and What It Actually Tests

Section 1357.06 is the part worth reading twice, because the test is easy to state wrong. It asks a question about money, not about offices: where did the capital financing this claim come from, directly or indirectly? A funder’s own headquarters is irrelevant to that question — with one exception, which is that a funder financing cases off its own balance sheet is the capital source, so for that funder the two questions collapse into one.

That’s why Burford gets named in every write-up of this law and why the naming is fair: it finances much of its business directly off its own balance sheet, and Burford Capital Limited is domiciled in Guernsey. No look-through required. A pure fund manager has no such shortcut in either direction — the entity signing the agreement is a vehicle for other people’s money, so its domicile tells you nothing, and the statute’s only route is to look through to the limited partners behind it.

Which is why the press coverage naming a second firm — a New York manager — was doing something different from what it appeared to be doing. If a US-domiciled manager is caught, it isn’t because of where it sits. It’s because of who its investors are. That firm’s own Form ADV does list foreign pension plans and sovereign wealth funds among its investor types, so the mechanism is real for it. But foreign pensions and sovereign wealth capital inside a US-domiciled litigation fund is close to standard practice among large institutional funders. It isn’t a distinguishing fact about one firm; it’s a description of the asset class’s investor base. Naming one manager implies a distinction the underlying structure doesn’t support.

One timing point matters for anyone with an existing Ohio book: § 1357.06 restricts entering into an agreement. It isn’t written to void agreements already in place, and there’s no companion provision reaching back to unwind funding relationships that predate the effective date. A fund with legacy Ohio exposure that isn’t signing anything new after October 6 isn’t the target of this section, wherever its capital came from.

The Transparency This Transparency Law Doesn’t Provide

Here’s the part that got almost no coverage, and it’s the most revealing thing about the statute: HB 105 gives an opposing party in a live Ohio case nothing at all.

Agreements go to the Attorney General after the case resolves and become public then. While the case is being litigated — when knowing who is funding the other side would actually change how a defendant evaluates conflicts, control, or settlement posture — there is no disclosure obligation to the parties, and no requirement that a funding agreement be produced or admitted.

That wasn’t an oversight, and the record shows the fight over it. The Ohio Insurance Institute’s proponent testimony pushed for what it called full “discovery parity” — disclosure at the outset of a case rather than after it ends. The Insurance Information Institute made the same argument publicly after signing, saying earlier disclosure would better equip courts to evaluate conflicts while a case is pending. Both got the registration regime they wanted and lost the disclosure timing. The bill’s own proponents are on record saying the transparency provisions don’t go far enough, which is an unusual position for a law that carries “transparency” as its selling point.

For a funder, that gap is the single most valuable thing in the statute. Registration is a cost. In-case disclosure to your opponent would have been a strategic liability, and Ohio didn’t impose one.

The Mechanism That’s Actually Spreading

The “second state to restrict litigation finance” framing was wrong in a way that matters more than the ban label. Ohio isn’t the second state with a foreign-capital restriction and it isn’t even close. By the time DeWine signed, five states had already enacted one, each with its own definition of who counts as foreign:

State	In force	Whose capital is barred
Colorado HB 25-1329	Aug 6, 2025	Foreign third-party funding, on the adversary-list model
Oklahoma HB 2619	Nov 1, 2025	Foreign Litigation Funding Prevention Act — adversary-list model
Montana SB 511	2025	Foreign adversaries and persons of concern, plus certain foreign persons; registration required of foreign persons; funder share capped at 25%
Arizona SB 1215	Dec 31, 2025	“Foreign entity of concern” by reference to 15 C.F.R. § 791.4 plus OFAC and terrorist-designation lists — the narrow version
Georgia SB 69	Jan 1, 2026 (registration)	Anyone affiliated with a foreign adversary, “foreign person,” “foreign principal,” or sovereign wealth fund — defined as anyone not a US citizen, permanent resident or US-incorporated entity, with no adversary qualifier
Ohio HB 105	Oct 6, 2026	Anyone “not domiciled in the United States,” reached directly or indirectly — the broad version
New Hampshire	Jan 1, 2027	Foreign adversaries and sanctioned entities only — the legislature dropped its broader registration regime and kept this

Read down the right-hand column and the split is the whole story. Most of these states barred a short list of adversary nations — China, Russia, Iran, North Korea and sanctioned entities. Ohio and Georgia barred foreign capital. Those are not variations in degree. An adversary-list bar is a screen most institutional LP bases pass without effort. A bar on anyone not domiciled in the US reaches the Canadian pension plan, the Dutch insurer and the UK family office that sit in ordinary commercial funds.

Georgia’s is the one that should worry a fund most, and it’s been law since January. It doesn’t test capital at all — it tests affiliation, asking whether the registrant is, in any capacity directly or indirectly related to its financing business, affiliated with a foreign person or principal. And registration is the gate to operating in the state, with failure to register carrying felony exposure. A capital-origin test can be satisfied deal by deal. An affiliation test aimed at the registrant can’t be, and “affiliated with” isn’t defined in the statute. I’m flagging how broad the trigger reads, not predicting how aggressively Georgia will enforce it, because I haven’t seen it tested.

Congress has a narrower version of the same mechanism moving too. H.R. 2675 cleared the House Judiciary Committee 15-11 and would make it unlawful for a foreign state or sovereign wealth fund to fund federal civil litigation, directly or indirectly, and unlawful for a party or counsel to take money sourced that way. Same look-through logic, aimed at state and sovereign money specifically rather than at all foreign capital.

The Blind Spot I Can’t Close

Here’s the honest limit on everything above: I don’t know whether the funds I’ve wired money to hold foreign capital in their own investor bases. That isn’t modesty, it’s structural. As a limited partner I get a capital account statement and reporting on my own commitment. I don’t receive, and have no contractual right to, a map of who else is in the fund or where their money originated. Ohio’s test is aimed precisely at that layer, and I sit one link below it with no visibility upward.

For the adversary-list states that’s survivable — most institutional LP bases don’t touch sanctioned-nation money, mine included as far as I know. For Ohio and Georgia it isn’t, because the trigger is ordinary foreign capital, which is common. “Where does my fund’s LP capital come from” has gone from an idle question to one with a compliance deadline attached, and only my GPs can answer it.

Can a Fund Structure Around It?

For Ohio’s capital test, yes, and legitimately: deal-level segregation. Route Ohio-venued matters through a verified-domestic vehicle and let broader multi-source capital handle everything else. A claim financed entirely with domestic money is clean under a capital-origin test, provided the pools stay genuinely separate deal by deal rather than nominally on paper. That’s compliance, not evasion.

It doesn’t automatically clear Georgia. A domestic sleeve satisfies an affiliation test only if it’s organizationally independent — a separate entity, arguably separately managed — not merely capital tagged domestic inside the same fund. A sleeve that is economically ring-fenced but run by the same GP as a foreign-funded vehicle elsewhere on the platform can pass Ohio and still fail Georgia.

And segregation costs something. Ohio deals get capped at whatever the sleeve can fund rather than the platform’s full capital, a parallel vehicle carries its own legal and accounting overhead, and the sleeve is only as clean as the GP’s ability to keep verifying that every dollar in it stays domestic. That’s the same verification problem I have, relocated one layer down to a smaller pool. It gets more tractable. It doesn’t get solved.

There’s also an unresolved ambiguity nobody has answered: is an LP’s domicile tested once at subscription, or freshly each time the fund signs a new agreement? A US investor who later retires abroad isn’t obviously grandfathered on the second reading. Nobody relocates to launder capital into a litigation fund, but if the answer lands on “locked at subscription,” that’s a gap a fund could lean on deliberately rather than drift into. I haven’t seen any fund I’m in address it either way.

What Happens If a Court Gets Hold of § 1357.06

The foreign-capital section is the most legally exposed part of this chapter, because it doesn’t regulate funding evenhandedly — it draws its line on the national origin of capital. State laws that discriminate against foreign commerce sit on weaker footing than ordinary economic regulation: the Supreme Court applies heightened scrutiny to state measures burdening foreign commerce (Japan Line v. County of Los Angeles), and separately treats foreign affairs as a federal domain states enter at their peril (Zschernig v. Miller; Crosby v. National Foreign Trade Council). A state deciding on its own which foreign capital may fund cases in its courts brushes against both. No one has challenged HB 105, and I’m not a lawyer or a forecaster — a narrow bar aimed at sovereign-wealth or adversary money might well survive where a blanket “anyone not domiciled in the US” version wouldn’t.

But the more useful observation for a fund’s budget is what a successful challenge would not accomplish. Ohio law carries a general severability rule, so a court striking § 1357.06 would leave registration, the conduct prohibitions, the post-resolution filing regime and the consumer terms standing. The prohibition is one section out of ten, and it’s the only one in real constitutional jeopardy. Every dollar of compliance spend attached to the other nine is spent regardless of how a challenge comes out. Funders hoping litigation makes this go away are hoping to win the least expensive part.

Where I Land

Ohio licensed the industry; it didn’t prohibit it. Domestic-capital funding remains legal in Ohio from October 6 — registered, conduct-constrained, and disclosed to the Attorney General once the case is over. That is a categorically different outcome from North Carolina’s outright ban.
The capital look-through is the part that travels. Six states now restrict funding by capital origin, and the meaningful division among them isn’t strict versus lenient — it’s adversary-list versus all-foreign. Only two states took the broad version, and one of them tests organizational affiliation rather than dollars.
The transparency is thinner than the branding. Nothing reaches an opposing party during a live case. The proponents who wrote the registration regime are publicly asking for the earlier disclosure they didn’t get, which is the clearest signal available that the disclosure piece is where the next Ohio bill starts.

None of this changes what I do with capital already committed. What it changes is the question list before a new commitment. Alongside fee stack, liquidity terms and underwriting quality, I now want to know roughly where a fund’s LP capital originates and whether the GP has any mechanism for segregating deals by venue. I don’t expect a precise answer — that information runs against the confidentiality GPs owe their other investors — but the shape of the answer, and whether the question has clearly been considered before, tells me most of what I need. Before October 6 is a reasonable time to ask it, because the template these bills are built from is still circulating, and the definition a state picks off it is a legislative choice rather than a foregone conclusion.

Sources

Ohio HB 105, enacted bill text — Ohio Rev. Code §§ 1357.01–1357.10, repealing § 1349.55; signed July 7, 2026; effective October 6, 2026
Ohio Society of CPAs, “Ohio legislature addresses third-party litigation funding” (July 24, 2026) — effective date; public database of agreements following case conclusion; Ohio Alliance for Civil Justice support
“Ohio Governor Signs Bill Requiring Litigation Finance Disclosure,” Bloomberg Law — registration and AG disclosure for commercial and consumer funders; conduct prohibition; bar on agreements with persons or entities domiciled outside the US; Rep. Meredith Craig quote
U.S. Chamber Institute for Legal Reform, statement on HB 105 — registration before operating, post-resolution AG disclosure, consumer fee caps and repayment limits, referral and commission prohibitions
“Ohio Governor Signs TPLF Reform Bill,” CLM Magazine (July 15, 2026) — Insurance Information Institute (Sean Kevelighan) on wanting disclosure while a case is pending rather than after it concludes
“New Ohio law has attorney general reviewing litigation-funding contracts,” Legal Newsline / The Center Square — the law does not require parties to reveal funding in court; contracts become public only after resolution
“Ohio Legislature Seeks to Further Regulate Third Party Litigation Funding Agreements,” Tucker Ellis LLP — section-level detail on ch. 1357
Ohio Insurance Institute, Proponent Testimony on Substitute HB 105, Ohio House Insurance Committee (Nov. 18, 2025) — the “discovery parity” request for disclosure at the start of a case
Georgia SB 69, Courts Access and Consumer Protection Act (signed Apr. 21, 2025; discovery provisions effective on signing, registration effective Jan. 1, 2026) — registration with the Department of Banking and Finance, failure to register a felony; bars registration by anyone affiliated with a foreign adversary, “foreign person,” “foreign principal” or sovereign wealth fund, each defined without an adversary-nation qualifier; agreements of $25,000 or more subject to discovery
Arizona SB 1215, Litigation Financing Safeguards Act (signed June 27, 2025; effective Dec. 31, 2025) — “foreign entity of concern” defined by 15 C.F.R. § 791.4 plus OFAC and State Department terrorist designations
Colorado HB 25-1329, Foreign Third-Party Litigation Financing (signed June 3, 2025; effective Aug. 6, 2025); Oklahoma HB 2619, Foreign Litigation Funding Prevention Act (signed May 2025; effective Nov. 1, 2025); Montana SB 511 (signed May 5, 2025) — creating the Foreign Investment in Litigation Financing Act, barring foreign adversaries, foreign persons of concern and certain foreign persons, requiring Secretary of State registration for foreign persons, and capping the funder’s share at 25%
New Hampshire Third-Party Litigation Funding Transparency Act (enacted July 2026, most provisions effective Jan. 1, 2027) — the enacted version dropped the broad registration and oversight regime, retaining a foreign-adversary financing ban plus a disclosure mandate
Burford Capital Limited, 2025 Annual Report on Form 10-K — capital sources across balance sheet, the BOF-C sovereign-wealth arrangement and private funds; BOF-C and a related sidecar, both funded by a single sovereign wealth fund investor, represented roughly 30% of AUM at Dec. 31, 2025
H.R. 2675, “Protecting Our Courts from Foreign Manipulation Act” (119th Congress) — bill text and House Report 119-700; passed House Judiciary Committee 15-11
Constitutional backdrop, no challenge to HB 105 filed as of this writing: Japan Line, Ltd. v. County of Los Angeles, 441 U.S. 434 (1979); Zschernig v. Miller, 389 U.S. 429 (1968); Crosby v. National Foreign Trade Council, 530 U.S. 363 (2000). Ohio Rev. Code § 1.50 (general severability)

Commentary and personal experience — not investment, legal, or tax advice. Investing carries risk, including total loss of capital. Always do your own due diligence.