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

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

A model act adopted by state insurance-committee legislators in November 2024 already named commercial litigation financiers as a target — before Ohio, Georgia, or Arizona wrote a single section. The litigation-funding industry’s own trade group has a different account of what these bills are really about, and it only holds up for one of them.

In October 2025, the International Legal Finance Association (ILFA) — the litigation funding industry’s own global trade group — told the federal judiciary’s rulemaking committee that mass-tort funding concerns belong in the rules governing multidistrict litigation, not in the general federal civil rules that also catch commercial funding. That’s a comment about federal procedure, not state law, but the logic travels easily: mass torts are the real target, and commercial funders like the ones I invest through are collateral damage from someone else’s fight.

It’s a real, on-the-record industry position, and it deserves to be taken seriously before it’s dismissed. But comfortable isn’t the same as checked. I used the same tool here that I used on Ohio’s statute itself: find the actual document a claim is built from, and read it before accepting anyone’s characterization of what a bill is “really” about — including the industry’s own.

The Bill That Wasn’t Written From Scratch

In November 2024, the National Council of Insurance Legislators (NCOIL) — 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’s a template: nineteen sections, built to be dropped into any state’s code with the state’s name filled in. Lay it next to Ohio’s enacted HB 105, and the correspondence isn’t loose paraphrase — it’s section-by-section.

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: bars financing “directly or indirectly” tied to a “foreign entity of concern” or “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 strategy or settlement § 1357.07(B): bars any funder from influencing case strategy or settlement decisions
§ 14 — Commercial Litigation Disclosure Prohibitions: counsel may not share sealed/protected discovery material with a financier § 1357.07(A): bars sharing documents subject to a protective or sealing order with a commercial financier
§ 12 — Reporting: annual filing to the state regulator Disclosure to the Attorney General after case resolution

I want to be precise about what this table shows and doesn’t show. I haven’t found a floor speech, committee report, or bill-history document where an Ohio legislator says “we started from the NCOIL draft.” No one has to confirm that for the correspondence to be real: five separately-numbered provisions, in the same order, doing the same things, is not what independent drafting looks like. Treat it as strong circumstantial alignment — a shared template, not a confirmed paper trail — the same honest-handicap standard I’d want applied to my own read of a bill’s legislative history.

It Was Never Just About Mass Torts

Here’s the part that undercuts ILFA’s mass-torts framing once you apply it at the state level. The model act’s own purpose clause doesn’t describe commercial funding as an afterthought bolted onto a consumer-lending bill — it names it as a co-equal target from the first 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 not language a mass-tort bill picks up by accident. It’s a dedicated wing of the template, built at the same time as the consumer-lending sections, by the same drafters.

Where Ohio Went Further Than Its Own Template

This is the detail that surprised me most, because it cuts against a different simple story too — that insurers and other bill proponents pushed for the broadest foreign-capital definition they could get. The model act’s own definition of who counts as foreign isn’t broad — it’s the narrow, adversary-list standard: “A foreign government or person listed in 15 CFR 791.4,” plus OFAC and State Department terrorist-designation lists (§ 3(8)–(9)). That’s the exact standard Arizona’s SB 1215 uses — limited to China, Russia, Iran, North Korea, and similarly sanctioned entities. Arizona adopted the template’s own default.

Ohio and Georgia didn’t. Both wrote a broader standard into their own statutes — “not domiciled in the United States,” no adversary qualifier — that goes past what the shared template itself proposed. That’s not proponents pushing a maximally broad ban through a captured legislature; it’s two state legislatures choosing to broaden a narrower model on their own. It’s one more version of “read the structure, not the label”: check whether a state adopted the template’s definition or expanded it — that’s a legislative choice on top of the template, not a feature of the template itself.

Who Actually Showed Up to Ask For It

The model act explains what the bill can say. It doesn’t explain who wanted Ohio, specifically, to pass it. That’s a separate question, and it has a separate, dated answer: Ohio’s own committee record.

The Ohio Insurance Institute — the state’s insurance trade association — filed proponent testimony ahead of the House Insurance Committee’s November 18, 2025 hearing on the substitute bill, 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.” OII didn’t just endorse the bill as written — its testimony pushed for more: full “discovery parity” requiring disclosure at the start of a case rather than after resolution, going beyond what HB 105 actually requires. The National Federation of Independent Business, Ohio’s small-business lobby, separately filed proponent testimony to the Senate Judiciary Committee framing the bill around “transparency” and third-party investors “overstepping boundaries.”

Neither group is a mass-tort plaintiff, a class-action defendant, or an insurer with an MDL exposure problem. They’re the state-level constituency for a disclosure-and-registration regime generally — and they showed up for the commercial-funding provisions specifically, not despite them.

ILFA showed up too, on the other side. Its opponent testimony to the same committee, back on March 18, 2025, called HB 105 “a classic solution in search of a problem” and argued no one had shown evidence that commercial funding had harmed “Ohio courts, Ohio businesses, or national security.” That’s a legitimate objection — but a different one from “this bill is really about mass torts.” ILFA didn’t make that argument in Columbus, where it was actually fighting this bill. It saved the mass-torts argument for the federal rulemaking committee, where the ask was narrower: route mass-tort concerns to the MDL rules, not exempt commercial funding from this whole category of statute.

The One Bill That Really Is About Mass Torts

Here’s where ILFA’s argument actually lands: on the one bill genuinely built the way it describes. Senators Grassley, Tillis, Kennedy, and Cornyn introduced the Litigation Funding Transparency Act of 2026 (S. 3826) on February 11, 2026. Its scope is explicit and narrow: disclosure requirements trigger only “if the lawsuit is a mass tort or class action,” and the bill text limits “covered civil action” to class actions, MDL-consolidated proceedings, and actions of 100 or more individual claims. A single commercial claim — the kind I have capital exposed to — isn’t covered at all.

The bill’s own endorsement list confirms the scope: the U.S. Chamber of Commerce, the American Property Casualty Insurance Association, the National Insurance Crime Bureau, and the High Tech Inventors Alliance (a coalition of large tech companies that are frequent patent-litigation defendants). Their statements are explicitly about class actions and MDLs — “who is secretly bankrolling the cases” in “class actions and multi-district litigation,” per the Chamber’s ILR president. That’s a real, current, on-the-record mass-tort-and-class-action coalition. It’s also a different bill than the one that reaches Ohio, Georgia, or Arizona.

Where I Land

  1. ILFA’s “route mass torts to the MDL rules” framing is right about one bill and wrong about the others. Congress’s own bill really is scoped to mass torts and class actions. The state template it gets compared to isn’t — commercial litigation financing has its own named sections, adopted at the same time, by the same drafters, before Ohio, Georgia, or Arizona existed as bills.
  2. The state-level push isn’t a hidden campaign against commercial litigation finance specifically, either. It’s a broader disclosure-and-foreign-capital template that happens to name commercial funding explicitly — verified from the template’s own text, not inferred from who benefits.
  3. The label did too much work again — the same lesson this blog keeps relearning under a different heading: read the structure, not the word on the label. This time the “structure” worth checking is one layer up from the statute — which template a state bill started from, and whether the state adopted or expanded that template’s own default definitions.

ILFA’s position isn’t wrong, exactly — it’s half right, about a bill that doesn’t actually reach my exposure. What I’m doing differently going forward: the next time a state “TPLF disclosure bill” headline shows up, my first move is now to check it against the NCOIL model’s section numbers before accepting anyone’s characterization of what the bill is “really” trying to do, including my own first read of a press release. North Carolina’s outright ban didn’t come from this template at all, which is its own tell — it’s worth knowing which states are working from the shared draft and which are writing something genuinely 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.