North Carolina bars outcome-based funding for civil cases

The law makes it unlawful to provide or engage in a litigation investment in North Carolina. The rule covers civil lawsuits, arbitrations, mediations, administrative cases, and other proceedings to resolve civil claims in North Carolina. A litigation investment is money for costs tied to a pending or possible civil case in exchange for repayment or other value that depends in any way on the case outcome. Exceptions include contingency-fee legal services, certain nonprofit support, loans not tied to the outcome, personal expense support, and support from immediate family members. The rule applies to civil cases started on or after June 22, 2026, and to contracts entered, renewed, or changed on or after that date.

The law makes contracts that violate the ban void and allows enforcement actions, penalties, and damages. These remedies apply to violations of the law's rules on litigation investments. The Attorney General may seek a court order stopping a violation and a civil penalty of up to $50,000 for each violation. A person injured by a violation may seek damages and choose statutory damages measured at three times the full potential investment; that person may also receive court costs and reasonable attorney fees. These rules apply to violations involving civil cases covered by the law from June 22, 2026.

The enacted text lists weekly minimum compensation of $50 for total disability and maximum awards for certain injuries. The weekly minimum concerns employees who qualify for total disability. The scheduled awards concern specified disfigurement or organ injuries. The printed wording does not clearly show whether these figures replace earlier amounts. It shows maximum awards of $40,000 for serious face or head disfigurement, $20,000 for certain bodily disfigurement, and $40,000 for loss of or permanent injury to some organs or body parts. The bodily disfigurement award requires a connection to a person's ability to get or earn work, and no other listed award may apply. This section applies to claims arising on or after July 1, 2027.