The Template Behind the Ban: Tracing HB 105 to Its Source

The Template Behind the Ban: Tracing HB 105 to Its Source

Most of the state litigation-funding bills in this wave descend from one model act adopted by insurance-committee legislators in November 2024. Lay the template beside the statutes and something odd shows up: the document is called a Transparency Act, and transparency is the part legislatures keep leaving out. What travels intact is the prohibition — and every state rewrites its scope on the way through.

My litigation finance exposure is commitments to commercial funds backing single high-value claims. No mass torts, no class actions anywhere in the book. That matters because the industry’s own trade group has spent two years arguing that this entire legislative wave is aimed at mass torts and that commercial funders are collateral damage from someone else’s fight. If that’s right, my positions are incidental bystanders — which is a conclusion I’d like to be true, arrived at by an organization paid to reach it. So I went to the source document instead.

What I found was more useful than a verdict on the industry’s spin. The bills aren’t being written from scratch, they aren’t being copied wholesale either, and the pattern in what gets kept and what gets dropped is the most predictive thing available about where this goes next.

The Bill That Wasn’t Written From Scratch

In November 2024 the National Council of Insurance Legislators — state legislators who sit on their chambers’ insurance committees, not a shadowy front group — adopted the Transparency in Third Party Litigation Financing Model Act, sponsored by Rep. Matt Lehman (IN) and co-sponsored by Del. Steve Westfall (WV). It runs nineteen sections and is built to be dropped into any state’s code with the state’s name filled in. Set it beside Ohio’s enacted HB 105 and the correspondence isn’t loose paraphrase:

NCOIL Model Act (Nov. 2024) Ohio HB 105 (as enacted)
§ 11 — Registration: consumer and commercial funders must register before doing business in the state All commercial and consumer funders must register with the Attorney General
§ 13 — Commercial Litigation Funding Prohibitions: financier may not enter an agreement “directly or indirectly with a foreign entity of concern, or a foreign country or person of concern” § 1357.06: bars funding a claim financed “directly or indirectly” by anyone “not domiciled in the United States”
§ 15 — Commercial Litigation Conduct Prohibitions: financier “may not make any decision, have any influence, or direct” the plaintiff or counsel on the conduct, settlement or resolution of the case § 1357.07(B): bars any funder from influencing case strategy or settlement decisions
§ 14 — Commercial Litigation Disclosure Prohibitions: counsel may not share sealed or protected discovery material with a financier § 1357.07(A): bars sharing documents subject to a protective or sealing order with a commercial financier
§ 19 — Effective Date: takes effect a set number of days after enactment and “shall not apply or in any way affect or invalidate any consumer or commercial litigation funding previously effectuated” Effective October 6, 2026; the capital bar restricts entering into agreements, with nothing reaching backward

Being precise about what this shows: I haven’t found a floor speech, committee report or bill-history document in which an Ohio legislator says “we started from the NCOIL draft.” Nobody needs to confirm that for the correspondence to be real — five separately numbered provisions, in the same order, doing the same work, is not what independent drafting produces. Treat it as strong circumstantial evidence of a shared template rather than a documented paper trail, which is the standard of proof I’d want applied to my own reading of a bill’s history.

The Transparency Act’s Transparency Provisions Are the Ones Nobody Takes

Here’s what I didn’t expect. The model act’s centerpiece transparency provision is § 16, and it is genuinely aggressive. A party or its counsel must, “without awaiting a discovery request,” hand any commercial funding agreement to every other party and to each insurer with a duty to defend — within a reasonable time after the agreement is signed. Subsection 2 adds four words that would change litigation strategy across the board: commercial funding agreements “shall be admissible at trial.”

Ohio enacted none of that. Its disclosure runs to the Attorney General after the case is over, becoming public at that point. An opposing party in a live Ohio case learns nothing, at any stage, and I’ve found no counterpart to the admissibility provision anywhere in the enacted chapter.

So the state that produced the “Ohio bans foreign litigation funding” headlines took the model’s prohibition and broadened it past what the template proposed, while declining the model’s actual transparency mechanism entirely. Both moves were choices. Neither is visible in the bill’s own text, because a statute doesn’t record what its drafters left on the table.

Once you start checking provision by provision instead of asking whether a state “adopted the model,” the wave stops looking like a single template spreading and starts looking like a menu being ordered from:

Model provision What the template says What states did with it
§ 13
capital prohibition		 Bars financing tied to a “foreign entity of concern” — defined by reference to the federal adversary list at 15 C.F.R. § 791.4, plus countries the governor designates as critical-infrastructure threats The one provision with near-universal uptake — and the one whose scope gets rewritten. Arizona and New Hampshire kept the adversary-list limit. Ohio and Georgia deleted the qualifier and reached all foreign capital
§ 16
disclosure to opponents		 Automatic production to all parties and duty-to-defend insurers without a discovery request, plus admissibility at trial Mostly declined. Ohio substituted post-resolution filing with the AG; Georgia made agreements of $25,000 or more merely discoverable; New Hampshire is the outlier that took a real disclosure mandate
§ 11
registration		 No business without registration; character-and-fitness review of officers and directors; disclosure of beneficial ownership above 20%; biennial renewal Widely taken, with the regulator swapped to fit each state: Ohio’s Attorney General, Georgia’s Department of Banking and Finance (failure to register is a felony). New Hampshire dropped registration altogether
§ 12
rate reporting		 Annual filing of deal count, total dollars funded, and the annual percentage charged to each funding recipient The quietest omission. Pricing transparency to a regulator is the provision that would tell the public what this capital actually costs, and it has largely not travelled
§ 5
consumer charge limits		 Prohibitions and charge limitations on consumer funding Taken in various forms: Ohio caps consumer fees, Montana and New York cap the funder’s share at 25% of recovery

The shape of that table is the argument. The provisions that constrain funders — registration, capital origin, conduct, consumer pricing — travel well. The provision that would arm opposing parties during a live case is the one that keeps getting swapped for something weaker. A model act named for transparency is being enacted as a licensing-and-prohibition regime.

It Was Never Just About Mass Torts

Apply the trade group’s mass-torts framing to the state bills and it fails on the template’s own text. The model doesn’t treat commercial funding as an afterthought bolted onto a consumer-lending bill — it names it as a co-equal target in the opening paragraph: “The Act also requires the disclosure of commercial litigation financing agreements and sets forth certain prohibitions regarding commercial litigation funding.” Four of its nineteen sections, 13 through 16, are captioned “Commercial Litigation Funding Prohibitions,” “Commercial Litigation Disclosure Prohibitions,” “Commercial Litigation Conduct Prohibitions” and “Disclosure of Commercial Litigation Financing Agreement.” That’s a dedicated wing of the template, drafted at the same time as the consumer sections, by the same sponsors, before Ohio, Georgia or Arizona existed as bills.

Who Actually Showed Up to Ask For It

The template explains what a bill can say. It doesn’t explain who wanted Ohio specifically to pass one, and that has a separate, dated answer in Ohio’s committee record.

The Ohio Insurance Institute filed proponent testimony ahead of the House Insurance Committee’s November 18, 2025 hearing, thanking the committee for its “efforts to protect Ohio’s courts and bring some level of transparency to the shadow industry of Third Party Litigation Funding.” It didn’t merely endorse the bill — it pushed for more, asking for full “discovery parity” with disclosure at the start of a case. The National Federation of Independent Business separately filed proponent testimony to the Senate Judiciary Committee framing the bill around transparency and third-party investors “overstepping boundaries.”

Read that against § 16 and the sequence becomes legible. The insurance lobby asked for the template’s real disclosure provision. It got registration, a conduct rule and a post-resolution filing instead. After the signing, the Insurance Information Institute said publicly that earlier disclosure would have better equipped courts to evaluate conflicts while cases are pending. The proponents are on record as partially disappointed, which is the clearest available evidence of who lost that particular fight — and the strongest signal of what the next Ohio bill will ask for.

The trade group showed up too, on the other side. Its opponent testimony to the same committee in March 2025 called HB 105 “a classic solution in search of a problem,” arguing nobody had shown commercial funding had harmed “Ohio courts, Ohio businesses, or national security.” That’s a legitimate objection, and a different one from “this bill is really about mass torts.” It didn’t make the mass-torts argument in Columbus, where it was actually fighting this bill.

The Two Federal Vehicles Aren’t the Same Bill

Where the mass-torts argument does land is Congress. Senators Grassley, Tillis, Kennedy and Cornyn introduced the Litigation Funding Transparency Act of 2026 (S. 3826) in February 2026, and its scope limit isn’t in a press release — it’s structural, in the definition the whole bill runs through. Proposed 28 U.S.C. § 1747(a)(3) defines a “covered civil action” as exactly three things: an action transferred to or filed in MDL proceedings under § 1407, a class action, and a consolidated proceeding of not fewer than 100 civil actions. Every operative provision applies only there. A single commercial claim, which is what my capital sits behind, isn’t covered at all. The endorsement list matches the scope: the U.S. Chamber, the American Property Casualty Insurance Association, the National Insurance Crime Bureau and a coalition of large tech companies that are frequent patent defendants, all talking explicitly about class actions and MDLs.

The other federal vehicle is not scoped that way, and this is the one worth watching. In March 2026 the Chamber’s Institute for Legal Reform and Lawyers for Civil Justice jointly asked the Advisory Committee on Civil Rules to amend FRCP 26(a)(1)(A) to require disclosure of third-party funding in all federal civil cases. No MDL trigger, no class-action predicate, no claim threshold. A rule written that way reaches one funded commercial claim in the District of Delaware on precisely the same terms as a 4,000-plaintiff mass tort — and it would do at the federal level what § 16 of the model act failed to do at the state level.

Which is the honest statement of the industry’s position: not “these bills are about mass torts,” which the state template refutes and which its own Ohio testimony didn’t argue, but rather the concern that motivated all of this is mass torts, so confine the remedy to the mass-tort rules instead of writing a scope-blind one. On that version the argument is strong about Rule 26 and weak about the statutes. It was aimed at the wrong document.

Where I Land

  1. The industry’s framing is right about the federal vehicles and wrong about the state ones. Congress’s bill really is scoped to mass torts and class actions; the Rule 26 proposal really is the scope-blind threat. The state template is neither, and commercial funding has its own named sections in it.
  2. The template gets shopped, not adopted. No state has enacted it whole. Ohio broadened the capital ban and discarded the disclosure mechanism; New Hampshire did close to the reverse, dropping registration while keeping a narrow ban and a real disclosure mandate; Georgia swapped a capital test for an affiliation test and criminalized non-registration. “State X adopted the NCOIL model” is not a useful sentence.
  3. Section 13 is the provision to track, and its definition is where the money is. The capital prohibition is the one piece with near-universal uptake, and it’s also the one every legislature rewrites. Whether a state keeps the adversary-list limit or deletes it decides whether the law screens out sanctioned money or reaches an ordinary Canadian pension plan — and that single drafting choice matters more to a fund’s book than everything else in the act combined.

What I do differently now is mechanical. When a state TPLF bill shows up, I check it against the model’s section numbers before reading anyone’s account of what it’s “really” about, and I check two provisions first: whether § 13’s foreign definition kept its adversary-list qualifier, and whether § 16’s disclosure timing survived in any form. Those two answers tell me whether the bill is a screen my funds pass automatically or a look-through into their investor base, and whether opposing counsel gets to see a funding agreement while a case is live. North Carolina’s outright ban came from none of this — no template, no nineteen sections — which is its own useful signal about which states are working from the shared draft and which are writing something of their own.

Sources

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