State Rep. Mike Harris today secured committee approval of his plan to ensure the full disclosure of third-party investors injecting shadow cash into Michigan courtrooms.

Third-party litigation funding – where outside investors finance legal action – occurs nationwide, and Michigan is no exception. In many cases, investors can pour significant sums into lawsuits without the knowledge of defendants, judges, or even the plaintiffs themselves.

“Shadow cash from secret investors is playing a concerning role in our courtrooms as lawsuits are increasingly being treated as perverse investment opportunities,” said Harris, R-Waterford. “This secret rot within our legal system is why I introduced the Third-Party Litigation Funding Transparency Act. When secret spenders try to milk cases for every penny, those costs get pushed onto higher insurance premiums, healthcare costs, and consumer prices.”

House Bill 5281 would require any third-party funder to disclose agreements to finance or profit from a lawsuit.

“My plan does not block lawsuits, restrict legitimate claims, or deny anyone their day in court,” Harris said. “It simply ensures transparency in Michigan’s legal system. Investors who profit from larger payouts have a clear incentive to prolong cases, reject reasonable settlements, and prioritize returns over fairness.”

Michigan does not currently have any guardrails on the use of shadow cash in its judicial system. Harris noted that, without oversight, even foreign actors could exploit these arrangements to influence the legal system, undermine the economy, or gain access to sensitive information.

Harris’ plan ensures the state treats shadow spending like what it is: a high-cost financial product marketed to people in distress. The legislation caps shadow cash spending, requires clear contracts, mandates meaningful disclosures, and includes a 10-business-day cancellation window. The proposal also bans kickbacks, referral fees, and the kind of backroom profits that corrupt trust and integrity.

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