Russ Johnston, Nationwide’s President of Commercial Lines, said the benefits that third-party funders get from litigation proceeds "stack the odds against" small businesses when they don't win their case. 

"When these third-party funders get these proceeds from a litigation situation, it's not taxed," Johnson said on a recent episode of the Triple-I podcast. "So think about it from an investor perspective. You can make a return on your investment that's tax-free. Like, there's not a lot of options out there for investors to be able to make this, but it really stacks the odds against our small and medium-sized businesses when they have a loss."

Proponents of tort reform are calling for tighter regulations on TPLF, emphasizing the need to level the playing field for small businesses and curb the unchecked growth of litigation investors. The growing influence of TPLF is seen as a significant driver of rising legal costs, disproportionately affecting companies with limited resources.

Nationwide Insurance is one of the largest insurance and financial services companies in the United States. Founded in 1925, Nationwide serves millions of customers across the country and is recognized for its financial strength and commitment to customer service. 

Third-Party Litigation Funding (TPLF) allows investors to finance lawsuits in exchange for a share of the settlement. Often unregulated, it can drive up legal costs and disproportionately impact small businesses, while offering tax-free returns to investors.

A Research and Markets report for 2025-2037 indicates the global market for litigation funding investment is set to rise at a CAGR of 11.1%, capturing a revenue of about USD 60 billion by the end of 2037.

A study by the U.S. Chamber of Commerce’s Institute for Legal Reform found that small businesses shouldered $160 billion of the $347 billion total in commercial liability tort costs in 2021 alone.