North Carolina lawmakers have dropped a major legal grenade on the governor’s desk, sending Gov. Josh Stein a bill on June 12, 2026, that would bar outside investors from bankrolling someone’s lawsuit in exchange for a slice of any settlement or judgment. If it becomes law, the measure would sharply rein in a growing litigation‑finance market and could reshape how big commercial and mass‑tort cases get paid for in the state.
What the bill would do
House Bill 315 uses a wide lens to define a "litigation investment" as money provided to cover fees, costs or expenses of a pending or potential civil case, in return for repayment or other consideration that depends on how the case turns out, and then makes those arrangements unlawful. According to the North Carolina General Assembly, the bill carves out exceptions for contingency‑fee legal services, insurers, certain nonprofit and legal‑aid arrangements, immediate family support and non‑contingent loans.
Enforcement would have some real teeth. The attorney general could seek injunctions and civil penalties of up to $50,000 per violation, and injured parties could pursue treble damages or common‑law damages.
How it cleared Raleigh
The proposal sailed through the General Assembly with lopsided support. The House voted 112‑0 and the Senate 45‑1 before the bill was formally presented to the governor on June 12. As reported by Axios Raleigh, Stein’s office had not yet said whether he plans to sign or veto the legislation.
Supporters and critics
The North Carolina Chamber helped drive the push for the ban, arguing that the civil justice system should not double as a financial market and warning about foreign capital quietly backing claims. The Chamber issued a North Carolina Chamber key‑vote alert in support of the bill.
Alyssa Morrissey of the Chamber told Axios Raleigh that the practice is most common in business litigation and can make it harder to see who is really funding a case. On the other side, UNC law professor Mark Weidemaier told Axios Raleigh that "the bill will likely limit financing options for some plaintiffs and defendants."
Why it matters
The fight in Raleigh is part of a bigger national debate. Industry and policy reports estimate that the commercial litigation‑finance market has reached roughly $15 billion in assets in recent years, growth that supporters of tighter rules say has raised transparency and national‑security questions.
The issue has also landed in Congress. Sen. Thom Tillis introduced S.1821, the "Tackling Predatory Litigation Funding Act," which would tax profits from third‑party litigation financing, a move that underscores how state‑level action in North Carolina could carry broader implications.
Legal implications
If the governor signs the bill, Section 1 would apply to civil proceedings and contracts that are "commenced on or after" the law's effective date and would authorize both the attorney general and private parties to seek penalties and damages. Those enforcement tools, combined with the statute's broad definitions and remedies, are likely to invite follow‑on court fights over discoverability, retroactivity and how state rules collide or mesh with federal ethics and tax proposals once the law takes effect.
