A quiet win for North Carolina’s legal system
N.C. became the first state to ban outside investors from bankrolling lawsuits for a cut of the winnings.
There is still no state budget, but the General Assembly’s short session has been remarkably productive otherwise.
Lawmakers just overrode several of Gov. Josh Stein’s vetoes from 2025, including the N.C. Border Protection Act, which is now law. In a short session that could have been consumed entirely by budget gridlock, the legislature has actually done a lot.
One of the most under-the-radar wins came last week, when Stein signed House Bill 315.
The new law makes North Carolina the first state in the country to ban third-party litigation investment. That sounds like something only lawyers and lobbyists would care about, but the basic idea is simple: Outside investors should not be able to bankroll lawsuits in exchange for a cut of the winnings.
A lawsuit is supposed to be a search for justice, not an asset class.
Litigation financing changes the incentives of the court system. It encourages more lawsuits, bigger demands and longer courtroom battles, not necessarily because justice requires it, but because a third party is trying to maximize its return.
North Carolina has spent years trying to improve its business climate. Taxes and regulations get most of the attention, but the legal climate is part of the equation, too. Businesses notice whether a state’s courts are places to resolve disputes or places where outside money can turn lawsuits into speculative investments.
By drawing a clear line against that practice, North Carolina is making its courts less attractive to outside litigation financiers and more predictable for everyone else.
That is good for North Carolina.
It doesn’t quite roll off the tongue like “First in Flight,” but “first in ending the financial securitization of the court system” is notable, too.
At a premium
In the paper
Gov. Stein signed a property tax moratorium bill that he clearly didn’t love. In my newspaper column, I argued that his decision shows where the 2026 campaign is headed: Property taxes are becoming the defining state issue, and that’s exactly the kind of debate North Carolina politics should be having.
Read it here, free with gift link: The surprising central issue in North Carolina’s 2026 elections
I am really constitutionally opposed to legislation that curtails mutually beneficial commercial arrangements. An investor who is willing to finance your continued litigation and bear some of the risk associated with it seems like a useful arrangement especially for poor people who may benefit from immediate payouts instead of speculative future paydays. This seems like a way to make justice far less accessible to poor people, or at the least will raise the costs and burden of seeking that justice. The populist urge to ban unseemly commercial arrangements is frustrating as developed and mature markets yield better results not worse.
I yearn to see property taxes go away completely; it's nuts. We don't own our property when we have to pay its value again and again to the state just in order to keep it. Seeing the catastrophic levels of waste and fraud, and sheer lack of bothering to oversee costs vs results, usually handing out our hard-earned money to cronies and layabouts, is truly infuriating. We should look at Florida's example and find a way for NC to implement similar.
Thanks for your reporting on these relevant issues!