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Are lawsuits good or bad? The answer is obvious: good lawsuits are good, and bad lawsuits are bad.

Sometimes it takes a lawsuit to block an unconstitutional law, enforce a valid contract, or recover legitimate damages. On the other hand, lawsuits can be frivolous or even abusive. To put it another way, consider which of these processes can be abused:

• running a business,
• campaigning for office,
• operating a church, or
• bringing a lawsuit.

Of course, each can be abused. There are plenty of scary anecdotes for each category. Leftists sometimes use this tactic to demonize all businesses or all churches. And now some lawmakers are using the same tactic to attack all lawsuits.

Unfortunately, state and federal lawmakers are being pushed to stifle lawsuits in general based on the fact that a few are bad. By attempting to overregulate third-party litigation financing, they would benefit the biggest, and often wokest, corporations while making it harder for the rest of us to hold them accountable in court. This makes no sense and threatens to make very bad policy.

Third-party litigation funding allows a plaintiff (the person bringing a lawsuit) to find an investor to pay the legal bills. This investor makes money only if the case is won. The arrangement is exactly like an attorney working “on contingency,” where the law firm covers its costs in exchange for a share of the judgment or settlement. The only difference is that the money comes from an investor rather than a lawyer.

Lawsuits can be meritorious or not, regardless of who pays the bills. If lawmakers are serious about stopping abusive litigation, they need to target … abusive litigation.