How Outside Funding Can Affect Personal Injury Cases in South Carolina

Key Takeaways:

• Third-party litigation funding gives an outside company a financial interest in the outcome of a lawsuit.
• South Carolina clients retain the final authority to accept or reject a settlement.
• Outside funding arrangements can raise concerns about cost, confidentiality, transparency, and influence.
• Injury victims should ask who is financing the case and whether anyone else may benefit from the recovery.

In an injury or accident case, you retain the final authority to accept or reject a settlement, while your South Carolina personal injury attorney advises you and handles the legal and tactical work required to pursue your claim. Over the past decade, outside investors have increasingly financed individual lawsuits, portfolios of cases, or law-firm expenses without representing the injured client. 

This practice is called third-party litigation funding (TPLF), and it has grown into a multi-billion-dollar industry. The term can cover several different arrangements, including funding provided to law firms for litigation expenses and consumer funding provided directly to injured people for living costs while a claim is pending. Understanding what it is, how it works, and what interests it serves can help injury victims make informed choices when they hire a lawyer and navigate a claim.

What Is Third-Party Litigation Funding?

Third-party litigation funding generally refers to an arrangement in which a person or company that is not a party to the lawsuit provides money to a litigant or law firm in return for compensation tied to the outcome of the case. In exchange, the funder may receive a percentage of the recovery, a multiple of the amount advanced, or another return calculated under the funding agreement. 

In a nonrecourse funding arrangement, the funder generally is not repaid if the case produces no recovery, although the terms vary by contract.

Supporters argue that litigation funding can help plaintiffs or law firms afford expensive cases and that consumer funding can provide injured people with money for living expenses while a claim is pending. Critics argue that funding can create conflicting financial incentives, particularly if the agreement gives the funder influence over litigation strategy, settlement timing, or other important decisions.

How Did Outside Investors Get Into Personal Injury Law?

Modern institutional litigation finance first gained prominence in large commercial disputes, where discovery, expert witnesses, and other litigation expenses can reach into the millions.

Over time, the model spread into personal injury, mass tort, and class action litigation. Investment firms became interested in litigation finance partly because lawsuit outcomes may be influenced by factors distinct from those driving traditional financial markets, even though cases may take years to resolve.

Where Does the Conflict of Interest Come From?

The core tension in third-party litigation funding is structural. A funder that provides money in return for compensation tied to the outcome has a financial interest in how the case resolves, but the funder is not the client, and its interests may diverge from the client’s in important ways.

Settlement Timing and Amount

A client may be willing to accept a reasonable settlement quickly because they need money now — to pay medical bills, cover lost wages, or support their family. A funder may have a different financial preference, but the client retains the right to accept or reject a settlement, and a lawyer may not surrender professional judgment to an outside funder.

Whether to Settle or Litigate

The client retains final authority over settlement, while the attorney provides advice about the risks and potential value of continuing litigation in a personal injury case. An outside funder may have financial preferences, but it should not control those decisions or interfere with the lawyer’s independent judgment.

Transparency and Disclosure

Disclosure rules vary by jurisdiction and by the type of funding involved. Some rules address disclosure to courts or opposing parties. A financing arrangement may also raise separate ethical issues if it creates a conflict, affects the representation, or risks exposing confidential client information.

What Are the States Doing About It?

State legislatures across the country are responding in different ways, including regulating consumer funding contracts, requiring disclosures, restricting funder control, limiting charges, or requiring certain arrangements to be revealed during litigation. 

North Carolina

North Carolina took a particularly restrictive approach when it enacted the Prohibit Litigation Investments Act on June 22, 2026. The law prohibits many forms of outcome-contingent financing for litigation fees, costs, and expenses while preserving exceptions for conventional legal representation, noncontingent loans, personal living expenses, nonprofit assistance, and certain family support.

South Carolina

South Carolina has not enacted a comparable prohibition. The proposed South Carolina Transparency in Consumer Legal Funding Act would regulate certain consumer funding contracts through registration, disclosure, contract, and consumer-protection requirements, but the bill remains in the House Judiciary Committee.

What Should Injury Victims Know Before Hiring a Lawyer?

If you have been hurt in an accident, ask whether outside investment relationships play any role in how the firm finances or manages cases. Consider asking:

• Does an outside company have a financial interest in my case?
• How are litigation expenses financed?
• Could a funder receive money from my settlement or judgment?
• Will information about my case be shared with any outside company?
• Can anyone other than me influence whether I accept a settlement?

Look for a firm that protects your settlement authority, explains how litigation expenses are financed, discloses material conflicts, and exercises independent professional judgment on your behalf.

South Carolina personal injury cases — from car accidents to nursing home neglect to wrongful death — involve deeply personal decisions at some of the hardest moments in a person's life. Those decisions deserve an advocate whose loyalty is to you and whose professional judgment is not controlled by an outside financial interest.