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Minutes for SB74 - Committee on Judiciary

Short Title

Providing for joint liability for costs and sanctions in third-party funded litigation, requiring certain discovery disclosures and requiring payment of certain costs for nonparty subpoenas.

Minutes Content for Thu, Feb 2, 2023

Chairwoman Warren opened the hearing on SB74. Jason Thompson, provided an overview of the bill (Attachment 1)

Eric Stafford, testified in support of SB74,  He states the Chamber's focus in supporting this bill is a response to hedge funds attempting to invest in and profit from litigation in Kansas. The Chamber believes SB74 offers a simple solution to protect against abuses in the state's legal system. (Attachment 2)

Mark Behrens, stated support for the enactment of SB74.  As part of its core mission, ILR has been studying the effects of third-party litigation funding (TPLF) for more than a decade.  The ILR has sponsored a number of nonpartisan symposia and conferences, as well as the publication of research reports on the effects of TPLF in the United States.  In addition, ILR has engaged in public advocacy in state legislatures, the U.S. Congress, and the judiciary. He finds SB74 promotes transparency in light of the proliferation of third-party litigation funding. (Attachment 3)

Written-only testimony in support of SB74 was submitted by:

  • Scot Kibbe, Vice President, State Government Relations, American Property Casualty Insurance, (Attachment 4)
  • Rachelle Colombo, Executive Director, Kansas Medical Society (Attachment 5)
  • Beth Smoller, General Counsel, Kansas Association of Insurance Agents (Attachment 6)

Mike O'Neal, testified in opposition to SB74 as drafted.  It is the understanding of ARC that the purpose of this legislation is to address the companies or industries that provide funds to pay for litigation and pay for the associated litigation costs.  ARC does not oppose this objective, but does oppose language that is overly broad and would negatively affect ARC members.  ARC would like to work with the proponents and the Committee to come up with mutually acceptable language.(Attachment 7)

John Federico, testified in opposition of SB74 on behalf of his client, the International Legal Finance Association (IFLA).  He stated IFLA's opposition to this bill remains the same as last year in that the problem which this bill seeks to fix does not exist in the state of Kansas, and what is being proposed in this bill amounts to forced disclosure' between two contracting parties.  (Attachment 8)

Rex Sharp, on behalf of Kansas Trial Lawyers, testified in opposition of SB74; litigation funding is not now a problem in Kansas nor does it pose a future threat. He also suggested enactment of this will would complicate litigation and run up costs. (Attachment 9)

Gary Barnett, Executive Director and General Counsel of the International Legal Finance Association, testified in opposition of SB74, stated his believe  as he believes that the legislation under consideration is unprecedented and would establish overbroad regulation that will adversely affect Kansas businesses and law firms by restricting their access to this type of capital. (Attachment 10)

Andrew Cohen, Director, Burford Capital, testified in opposition of SB74.  He stated the vast majority of courts and legislatures have declined to impose additional unnecessary regulation on the commercial legal finance industry, particularly because commercial legal finance does not present any novel ethical or evidentiary issues that cannot be addressed by currently-existing discovery and professional conduct rules.(Attachment 11)

Jack Kelly, Managing Director of the American Legal Finance Association (ALFA), testified in opposition to SB74 as currently written. Mr. Kelly stated he looks forward to working with the sponsors and proponents of this legislation to make recommended changes.  (Attachment 12)

Written-only testimony in opposition to SB74  was submitted by Joseph Molina,on behalf of the Kansas Bar Association. (Attachment 13)

The conferees responded to questions from Committee members.

Chairwoman Warren closed the hearing on SB74.