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Senate
File
54
-
Introduced
SENATE
FILE
54
BY
ROWLEY
A
BILL
FOR
An
Act
regulating
litigation
financing
contracts,
and
including
1
effective
date
and
applicability
provisions.
2
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
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Section
1.
NEW
SECTION
.
537C.1
Title.
1
This
chapter
shall
be
known
as
the
“Litigation
Financing
2
Transparency
and
Consumer
Protection
Act”
.
3
Sec.
2.
NEW
SECTION
.
537C.2
Definitions.
4
As
used
in
this
chapter,
unless
otherwise
required
by
the
5
context:
6
1.
“Consumer”
means
any
individual
who
resides,
is
present,
7
or
is
domiciled
in
this
state
or
who
is
or
may
become
a
8
plaintiff,
claimant,
or
complainant
in
a
civil
action
or
an
9
administrative
proceeding
or
in
pursuit
of
any
claim
or
cause
10
of
action
in
this
state.
11
2.
“Entity”
means
any
domestic
or
foreign
corporation,
12
partnership,
limited
partnership,
limited
liability
company,
13
trust,
fund,
plan,
or
any
other
business,
enterprise,
14
association,
or
organization
of
any
kind
or
nature.
15
3.
“Legal
representative”
means
any
attorney,
group
16
of
attorneys,
or
law
firm
duly
licensed
and
authorized
to
17
practice
law
and
to
represent
a
consumer
in
a
civil
action,
18
administrative
proceeding,
or
claim
to
recover
damages
in
this
19
state.
20
4.
“Litigation
financer”
means
any
person
or
group
of
21
persons
engaged
in,
formed,
created,
or
established
for
the
22
purpose
of
engaging
in
the
business
of
litigation
financing
or
23
any
other
business
or
economic
activity
in
which
a
person
or
24
group
of
persons
receive
consideration
of
any
kind
in
exchange
25
for
providing
litigation
financing.
26
5.
“Litigation
financing”
means
the
financing,
funding,
27
advancing,
or
loaning
of
money
to
pay
fees,
costs,
expenses,
or
28
any
other
sums
arising
from
or
in
any
manner
related
to
a
civil
29
action,
administrative
proceeding,
claim,
or
cause
of
action,
30
if
the
financing,
funding,
advancing,
or
loaning
of
money
is
31
provided
by
any
person
other
than
a
person
who
is
any
of
the
32
following:
33
a.
A
party
to
the
civil
action,
administrative
proceeding,
34
claim,
or
cause
of
action.
35
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b.
A
legal
representative
engaged,
directly
or
indirectly
1
through
another
legal
representative,
to
represent
a
party
in
2
a
civil
action,
administrative
proceeding,
claim,
or
cause
of
3
action.
4
c.
An
entity
or
insurer
with
a
preexisting
contractual
5
obligation
to
indemnify
or
defend
a
party
in
a
civil
action,
6
administrative
proceeding,
claim,
or
cause
of
action.
7
6.
a.
“Litigation
financing
contract”
means
a
written
8
contract
in
which
a
person
agrees
to
provide
litigation
9
financing
to
any
person
in
conjunction
with
a
civil
action
or
10
an
administrative
proceeding
or
in
pursuit
of
any
claim
or
11
cause
of
action
in
consideration
for
any
of
the
following:
12
(1)
The
payment
of
interest,
fees,
or
other
consideration
to
13
the
person
providing
the
litigation
financing.
14
(2)
Granting
or
assigning
to
the
person
providing
the
15
litigation
financing
a
right
to
receive
payment
from
the
16
value
of
any
proceeds
or
other
consideration
realized
from
17
any
judgment,
award,
settlement,
verdict,
or
other
form
of
18
monetary
relief
any
consumer,
legal
representative,
or
other
19
person
may
receive
or
recover
in
relation
to
the
civil
action,
20
administrative
proceeding,
claim,
or
cause
of
action.
21
b.
“Litigation
financing
contract”
does
not
include
any
22
agreement,
contract,
or
engagement
of
a
legal
representative
23
to
render
legal
services
to
a
consumer
on
a
contingency
fee
24
basis,
including
the
advancement
of
legal
costs
by
the
legal
25
representative,
in
which
the
services
or
costs
are
provided
26
to
or
on
behalf
of
a
consumer
by
the
legal
representative
27
representing
the
consumer
in
the
civil
action,
administrative
28
proceeding,
claim,
or
cause
of
action.
29
7.
“Person”
means
an
individual
or
an
entity.
30
8.
“Regulated
lender”
means
any
of
the
following:
31
a.
A
bank,
building
and
loan
association,
savings
and
loan
32
association,
trust
company,
credit
union,
credit
association,
33
consumer
loan
licensee,
deferred
deposit
loan
licensee,
34
residential
mortgage
lender
licensee,
development
corporation,
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bank
holding
company,
or
mutual
or
stock
insurance
company
1
organized
pursuant
to
state
or
federal
statutory
authority
and
2
subject
to
supervision,
control,
or
regulation
by
any
of
the
3
following:
4
(1)
An
agency
of
the
state
of
Iowa.
5
(2)
An
agency
of
the
federal
government.
6
b.
A
subsidiary
of
an
entity
described
in
paragraph
“a”
.
7
c.
An
Iowa
state
agency
or
a
federal
agency
that
is
8
authorized
to
lend
money.
9
d.
A
corporation
or
other
entity
established
by
congress
or
10
the
state
of
Iowa
that
is
owned,
in
whole
or
in
part,
by
the
11
United
States
or
the
state
of
Iowa
and
that
is
authorized
to
12
lend
money.
13
Sec.
3.
NEW
SECTION
.
537C.3
Registration.
14
1.
A
person
shall
not
engage
in
litigation
financing
in
this
15
state
unless
the
person
is
registered
with
the
secretary
of
16
state
as
a
litigation
financer
pursuant
to
this
chapter.
17
2.
If
the
person
registering
as
a
litigation
financer
is
an
18
entity:
19
a.
The
entity
must
be
active
and
in
good
standing
as
20
reflected
in
the
office
of
the
secretary
of
state.
21
b.
The
entity’s
articles
of
incorporation,
charter,
articles
22
of
organization,
certificate
of
limited
partnership,
or
other
23
organizational
or
governing
document
must
contain
a
statement
24
that
the
entity
has
the
power
to
engage
in
the
business
of
25
litigation
financing
and
is
designated
as
a
litigation
financer
26
pursuant
to
this
chapter.
27
3.
To
register
as
a
litigation
financer,
a
person
shall
file
28
a
registration
statement
with
the
secretary
of
state
setting
29
forth
all
of
the
following
information:
30
a.
The
legal
name
of
the
litigation
financer.
31
b.
The
physical
street
address
and
mailing
address
of
the
32
litigation
financer.
33
c.
A
telephone
number
or
electronic
mail
address
through
34
which
the
litigation
financer
may
be
contacted.
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d.
The
physical
street
address
and
mailing
address
of
the
1
licensed
financer’s
registered
office
and
the
name
of
the
2
registered
agent
at
the
registered
office
who
is
authorized
to
3
accept
service
of
process
on
behalf
of
the
licensed
financer.
4
e.
Any
other
information
the
secretary
of
state
considers
5
necessary.
6
4.
If
the
person
seeking
to
register
as
a
litigation
7
financer
is
an
entity,
the
following
information
must
be
set
8
forth
in
the
registration
statement
with
respect
to
each
person
9
that,
directly
or
indirectly,
owns,
controls,
holds
with
the
10
power
to
vote,
or
holds
proxies
representing
five
percent
or
11
more
of
the
voting
securities
of
the
litigation
financer:
12
a.
The
legal
name,
physical
street
address,
and
mailing
13
address
of
each
person.
14
b.
If
the
person
is
an
individual,
all
of
the
following:
15
(1)
The
individual’s
occupation.
16
(2)
Any
offices
and
positions
held
with
the
litigation
17
financer
during
the
past
five
years.
18
(3)
Any
conviction
of
a
crime
other
than
misdemeanor
traffic
19
violations
during
the
past
ten
years.
20
c.
If
the
person
is
an
entity,
all
of
the
following:
21
(1)
The
nature
of
the
entity’s
business
operations,
if
22
any,
during
the
past
five
years
or
a
description
of
the
23
business
intended
to
be
done
by
the
entity
and
the
entity’s
24
subsidiaries,
if
any.
25
(2)
A
list
of
all
individuals
who
are
or
who
have
been
26
selected
to
become
directors
or
officers
of
the
entity
and
27
each
subsidiary
of
the
entity.
The
list
must
include
for
each
28
individual
the
information
required
by
paragraph
“b”
.
29
5.
A
litigation
financer
subject
to
registration
under
this
30
chapter
shall
file
an
amended
registration
within
thirty
days
31
whenever
the
information
contained
in
the
most
recently
filed
32
registration
changes
or
becomes
inaccurate
or
incomplete
in
any
33
respect.
34
6.
The
secretary
of
state
is
authorized
to
prescribe
the
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forms
and
the
filing
fees
the
secretary
of
state
considers
1
necessary
for
the
purposes
of
this
chapter.
2
7.
All
documents
and
information
filed
with
the
secretary
of
3
state
pursuant
to
this
section
are
public
records.
4
8.
The
secretary
of
state’s
duty
to
file
documents
under
5
this
section
is
ministerial.
The
secretary
of
state’s
filing
6
or
refusing
to
file
a
document
does
not
create
a
presumption
7
of
any
of
the
following:
8
a.
That
the
document
does
or
does
not
conform
to
the
9
requirements
of
this
chapter.
10
b.
That
the
information
contained
in
the
document
is
correct
11
or
incorrect.
12
Sec.
4.
NEW
SECTION
.
537C.4
Litigation
financing
13
protections.
14
1.
A
litigation
financer
shall
not
do
any
of
the
following:
15
a.
Pay
or
offer
commissions,
referral
fees,
rebates,
or
16
other
forms
of
consideration
to
any
person
in
exchange
for
17
referring
a
consumer
to
a
litigation
financer.
18
b.
Accept
any
commissions,
referral
fees,
rebates,
or
other
19
forms
of
consideration
from
any
person
providing
any
goods
or
20
rendering
any
services
to
the
consumer.
21
c.
Charge
a
rate
of
interest
that
exceeds
the
rate
of
22
interest
allowed
under
chapter
535.
23
d.
Receive
or
recover
any
payment
that
exceeds
twenty-five
24
percent
of
the
amount
of
any
judgment,
award,
settlement,
25
verdict,
or
other
form
of
monetary
relief
obtained
in
the
civil
26
action,
administrative
proceeding,
claim,
or
cause
of
action
27
that
is
the
subject
of
the
litigation
contract.
28
e.
Advertise
false
or
misleading
information
regarding
the
29
litigation
financer’s
products
or
services.
30
f.
Refer
or
require
any
consumer
to
hire
or
engage
any
31
person
providing
any
goods
or
rendering
any
services
to
the
32
consumer.
33
g.
Fail
to
promptly
deliver
a
fully
completed
and
signed
34
litigation
financing
contract
to
the
consumer
and
the
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consumer’s
legal
representative.
1
h.
Attempt
to
secure
a
remedy
or
obtain
a
waiver
of
any
2
remedy,
including
but
not
limited
to
compensatory,
statutory,
3
or
punitive
damages,
that
the
consumer
may
or
may
not
be
4
entitled
to
pursue
or
recover
otherwise.
5
i.
Offer
or
provide
legal
advice
to
the
consumer.
6
j.
Assign,
including
securitizing,
a
litigation
financing
7
contract
in
whole
or
in
part.
8
k.
Report
a
consumer
to
a
credit
reporting
agency
if
9
insufficient
funds
remain
to
repay
the
litigation
financer
10
in
full
from
the
proceeds
received
from
any
judgment,
award,
11
settlement,
verdict,
or
other
form
of
monetary
relief
obtained
12
in
the
civil
action,
administrative
proceeding,
claim,
or
cause
13
of
action
that
is
the
subject
of
the
litigation
financing
14
contract.
15
l.
Demand,
request,
receive,
or
exercise
any
right
to
16
influence,
affect,
or
otherwise
make
any
decision
in
the
17
handling,
conduct,
administration,
litigation,
settlement,
or
18
resolution
of
any
civil
action,
administrative
proceeding,
19
claim,
or
cause
of
action
in
which
the
litigation
financer
has
20
provided
litigation
financing.
All
rights
remain
solely
with
21
the
consumer
and
the
consumer’s
legal
representative.
22
2.
A
person
who
provides
any
goods
or
renders
any
services
23
to
the
consumer
shall
not
have
a
financial
interest
in
24
litigation
financing
and
shall
not
receive
any
commissions,
25
referral
fees,
rebates,
or
other
forms
of
consideration
from
26
any
litigation
financer
or
the
litigation
financer’s
employees,
27
owners,
or
affiliates.
28
Sec.
5.
NEW
SECTION
.
537C.5
Litigation
financing
contract
29
——
disclosures.
30
1.
The
terms
and
conditions
of
a
litigation
financing
31
contract
must
be
set
forth
in
a
fully
completed
written
32
contract
with
no
terms
or
conditions
omitted.
The
litigation
33
financing
contract
must
contain
all
terms
and
conditions
at
34
the
time
it
is
signed
by
any
party
to
the
litigation
financing
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contract.
1
2.
On
execution
of
a
litigation
financing
contract,
a
2
litigation
financer
shall
not
amend
the
terms
or
conditions
of
3
the
litigation
financing
contract
without
full
disclosure
to
4
and
the
prior
written
consent
of
all
parties
to
the
litigation
5
financing
contract.
6
3.
A
litigation
financing
contract
must
set
forth
the
name,
7
physical
street
address,
and
mailing
address
of
the
litigation
8
financer
on
the
first
page
of
the
litigation
financing
9
contract.
10
4.
A
litigation
financing
contract
must
contain
the
11
following
disclosures
that
constitute
material
terms
and
12
conditions
of
the
litigation
financing
contract
and
must
be
13
typed
in
at
least
fourteen
point
bold
font
and
be
placed
14
clearly
and
conspicuously
immediately
above
the
consumer’s
15
signature
line
in
the
litigation
financing
contract:
16
IMPORTANT
DISCLOSURES
——
PLEASE
READ
CAREFULLY
17
Right
to
Cancellation:
You
may
cancel
this
litigation
18
financing
contract
without
penalty
or
further
obligation
within
19
five
business
days
from
the
date
you
sign
this
contract
or
20
the
date
you
receive
financing
from
the
litigation
financer,
21
whichever
date
is
later.
You
may
cancel
by
sending
a
notice
22
of
cancellation
to
the
litigation
financer
and
returning
to
23
the
litigation
financer
any
funds
received
from
the
litigation
24
financer
at
the
litigation
financer’s
address
set
forth
on
the
25
first
page
of
this
contract.
26
The
maximum
amount
the
litigation
financer
may
receive
or
27
recover
from
any
contingent
payment
shall
not
exceed
twenty
28
five
percent
of
the
amount
of
any
judgment,
award,
settlement,
29
verdict,
or
other
form
of
monetary
relief
obtained
in
the
civil
30
action,
administrative
proceeding,
claim,
or
cause
of
action
31
that
is
the
subject
of
this
litigation
contract.
32
The
litigation
financer
agrees
that
it
has
no
right
to,
33
and
will
not
demand,
request,
receive,
or
exercise
any
right
34
to,
influence,
affect,
or
otherwise
make
any
decision
in
the
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54
handling,
conduct,
administration,
litigation,
settlement,
or
1
resolution
of
your
civil
action,
administrative
proceeding,
2
claim,
or
cause
of
action.
All
of
these
rights
remain
solely
3
with
you
and
your
legal
representative.
4
If
there
is
no
recovery
of
any
money
from
your
civil
action,
5
administrative
proceeding,
claim,
or
cause
of
action,
or
if
6
there
is
not
enough
money
to
satisfy
in
full
the
portion
7
assigned
to
the
litigation
financer,
you
will
not
owe
anything
8
in
excess
of
your
recovery.
9
You
are
entitled
to
a
fully
completed
contract
with
no
terms
10
or
conditions
omitted
prior
to
signing.
Before
signing
this
11
contract,
you
should
read
the
contract
completely
and
consult
12
an
attorney.
13
5.
If
the
consumer
is
represented
by
a
legal
representative
14
in
the
civil
action,
administrative
proceeding,
claim,
or
cause
15
of
action
that
is
the
subject
of
the
litigation
financing
16
contract,
the
legal
representative
shall
acknowledge
in
17
the
contract
that
the
legal
representative
and
the
legal
18
representative’s
employer
and
employees
have
not
received
or
19
paid
a
referral
fee
or
any
other
consideration
from
or
to
the
20
litigation
financer
and
have
no
obligation
to
do
so
in
the
21
future.
22
6.
If
the
consumer’s
legal
representative
is
a
party
to
a
23
litigation
financing
contract
related
to
the
consumer’s
civil
24
action,
administrative
proceeding,
claim,
or
cause
of
action
25
that
is
the
subject
of
the
litigation
financing
contract,
the
26
legal
representative
shall
disclose
and
deliver
the
litigation
27
financing
contract
to
the
consumer.
Following
this
disclosure
28
and
delivery,
the
consumer
shall
sign
an
acknowledgment
that
29
the
consumer
has
read
and
understands
the
terms
and
conditions
30
of
the
litigation
financing
contract
and
the
consumer
must
be
31
provided
with
a
copy
of
the
acknowledgment.
32
Sec.
6.
NEW
SECTION
.
537C.6
Disclosure
and
discovery
of
33
litigation
financing
contracts.
34
1.
Except
as
otherwise
stipulated
or
ordered
by
the
court,
a
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consumer
or
the
consumer’s
legal
representative
shall,
without
1
awaiting
a
discovery
request,
disclose
and
deliver
to
all
of
2
the
following
persons
the
litigation
financing
contract:
3
a.
Each
party
to
the
civil
action,
administrative
4
proceeding,
claim,
or
cause
of
action,
or
to
each
party’s
legal
5
representative.
6
b.
The
court,
agency,
or
tribunal
in
which
the
civil
action,
7
administrative
proceeding,
claim,
or
cause
of
action
may
be
8
pending.
9
c.
Any
known
person,
including
an
insurer,
with
a
10
preexisting
contractual
obligation
to
indemnify
or
defend
a
11
party
to
the
civil
action,
administrative
proceeding,
claim,
12
or
cause
of
action.
13
2.
The
disclosure
obligation
under
subsection
1
exists
14
regardless
of
whether
a
civil
action
or
an
administrative
15
proceeding
has
commenced.
16
3.
The
disclosure
obligation
under
subsection
1
is
a
17
continuing
obligation,
and
within
thirty
days
of
entering
18
into
a
litigation
financing
contract
or
amending
an
existing
19
litigation
financing
contract,
the
consumer
or
the
consumer’s
20
legal
representative
shall
disclose
and
deliver
any
new
or
21
amended
litigation
financing
contracts.
22
4.
The
existence
of
the
litigation
financing
contract
23
and
all
participants
or
parties
to
a
litigation
financing
24
contract
are
permissible
subjects
of
discovery
in
any
civil
25
action,
administrative
proceeding,
claim,
or
cause
of
action
26
to
which
litigation
financing
is
provided
under
the
litigation
27
financing
contract,
regardless
of
whether
a
civil
action
or
an
28
administrative
proceeding
has
commenced.
29
Sec.
7.
NEW
SECTION
.
537C.7
Exemptions.
30
This
chapter
does
not
apply
to
any
of
the
following:
31
1.
A
nonprofit
organization
that
provides
litigation
32
financing,
directly
or
indirectly,
for
the
benefit
of
the
33
nonprofit
organization
or
one
or
more
of
the
nonprofit
34
organization’s
members
without
receiving,
in
consideration
for
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the
litigation
financing,
any
of
the
following:
1
a.
The
payment
of
interest,
fees,
or
other
consideration.
2
b.
Except
for
in-house
counsel
of
the
nonprofit
3
organization,
any
right
to
recovery
or
payment
from
the
amount
4
of
any
judgment,
award,
settlement,
verdict,
or
other
form
of
5
monetary
relief
obtained
in
the
civil
action,
administrative
6
proceeding,
claim,
or
cause
of
action.
7
2.
Any
litigation
financing
provided
by
an
entity
engaged
in
8
commerce
or
business
activity,
but
only
if
the
entity
does
not
9
do
any
of
the
following:
10
a.
Charge
or
collect
any
interest,
fees,
or
other
11
consideration.
12
b.
Retain
or
receive
any
financial
interest
in
the
outcome
13
of
the
civil
action,
administrative
proceeding,
claim,
or
cause
14
of
action.
15
c.
Receive
any
right
to
recovery
or
payment
from
the
amount
16
of
any
judgment,
award,
settlement,
verdict,
or
other
form
of
17
monetary
relief
obtained
in
the
civil
action,
administrative
18
proceeding,
claim,
or
cause
of
action.
19
3.
A
regulated
lender
that
does
not
receive,
in
20
consideration
for
loaning
money
to
any
person,
a
right
to
21
receive
payment
from
the
value
of
any
proceeds
or
other
22
consideration
realized
from
any
judgment
award,
settlement,
23
verdict,
or
other
form
of
monetary
relief
any
person
24
may
receive
or
recover
in
relation
to
any
civil
action,
25
administrative
proceeding,
claim,
or
cause
of
action.
26
Sec.
8.
NEW
SECTION
.
537C.8
Class
actions.
27
This
chapter
shall
apply
to
any
civil
action
filed
or
28
certified
as
a
class
action
in
which
litigation
financing
29
is
provided.
A
litigation
financer
owes
a
fiduciary
30
duty
to
all
class
members
or
intended
beneficiaries
of
a
31
certified
class
and
shall
act
in
a
manner
consistent
with
the
32
litigation
financer’s
fiduciary
duty
throughout
the
civil
33
action.
In
addition
to
the
disclosure
requirements,
the
34
legal
representative
of
the
putative
class
shall
disclose
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to
all
parties,
putative
class
members,
and
the
court
any
1
legal,
financial,
or
other
relationship
between
the
legal
2
representative
and
the
litigation
financer.
A
class
member
is
3
entitled
to
receive
from
the
class
counsel
a
true
and
correct
4
copy
of
the
litigation
financing
contract
on
request.
5
Sec.
9.
NEW
SECTION
.
537C.9
Joint
and
several
liability
for
6
costs.
7
A
litigation
financer
is
jointly
and
severally
liable
for
8
any
award
or
order
imposing
or
assessing
costs
or
monetary
9
sanctions
against
a
consumer
arising
from
or
relating
to
any
10
civil
action,
administrative
proceeding,
claim,
or
cause
11
of
action
for
which
the
litigation
financer
is
providing
12
litigation
financing.
13
Sec.
10.
NEW
SECTION
.
537C.10
Regulatory
oversight
——
14
rulemaking.
15
The
secretary
of
state
may
adopt
rules
and
other
policies
in
16
overseeing
the
practice
of
litigation
financing
consistent
with
17
this
chapter.
18
Sec.
11.
NEW
SECTION
.
537C.11
Violation
——
unenforceable
19
contract.
20
1.
Any
violation
of
this
chapter
by
the
litigation
financer
21
renders
the
litigation
financing
contract
unenforceable
by
22
the
litigation
financer
or
any
successor-in-interest
to
the
23
litigation
financing
contract.
24
2.
If
a
litigation
financer
charges
a
rate
of
interest
that
25
exceeds
the
rate
of
interest
allowed
under
chapter
535,
the
26
litigation
financer
shall
be
subject
to
a
penalty
for
usury
and
27
an
action
to
recover
excessive
interest
as
authorized
under
28
chapter
535.
29
Sec.
12.
EFFECTIVE
DATE.
This
Act
takes
effect
January
1,
30
2026.
31
Sec.
13.
APPLICABILITY.
This
Act
applies
to
any
civil
32
action
or
administrative
proceeding
involving
a
litigation
33
financer
pending
on
or
commenced
on
or
after
January
1,
2026.
34
EXPLANATION
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The
inclusion
of
this
explanation
does
not
constitute
agreement
with
1
the
explanation’s
substance
by
the
members
of
the
general
assembly.
2
This
bill
creates
the
litigation
financing
transparency
and
3
consumer
protection
Act.
4
The
bill
requires
the
registration
of
litigation
financers
5
with
the
secretary
of
state.
The
bill
provides
registration
6
requirements
and
procedures
for
the
litigation
financer.
The
7
bill
provides
that
all
documents
and
information
filed
with
the
8
secretary
of
state
pursuant
to
the
registration
of
the
ligation
9
financer
are
public
records.
10
The
bill
provides
limitations
on
how
a
litigation
financer
11
may
conduct
business.
A
litigation
financer
may
not
(1)
pay
or
12
offer
any
form
of
consideration
to
any
person
in
exchange
for
13
referring
a
consumer
to
a
litigation
financer,
(2)
accept
any
14
type
of
consideration
from
any
person
providing
any
goods
or
15
rendering
any
services
to
the
consumer,
(3)
charge
a
rate
of
16
interest
that
exceeds
the
rate
of
interest
allowed
under
Code
17
chapter
535
(money
and
interest),
(4)
receive
or
recover
any
18
payment
that
exceeds
25
percent
of
the
reward
obtained
in
the
19
action
subject
to
the
litigation
contract,
(5)
advertise
false
20
or
misleading
information
regarding
the
litigation
financer
21
products
or
services,
(6)
refer
or
require
any
consumer
to
22
hire
or
engage
any
person
providing
any
goods
or
rendering
23
any
services
to
the
consumer,
(7)
fail
to
promptly
deliver
24
a
fully
completed
and
signed
litigation
financing
contract
25
to
the
consumer
and
the
consumer’s
legal
representative,
(8)
26
attempt
to
secure
a
remedy
or
obtain
a
waiver
of
any
remedy,
27
including
but
not
limited
to
compensatory,
statutory,
or
28
punitive
damages,
(9)
offer
or
provide
legal
advice
to
the
29
consumer,
(10)
assign
a
litigation
financing
contract
in
whole
30
or
in
part,
(11)
report
a
consumer
to
a
credit
reporting
31
agency,
or
(12)
demand,
request,
receive,
or
exercise
any
right
32
to
influence,
affect,
or
otherwise
make
any
decision
in
the
33
handling,
conduct,
administration,
litigation,
settlement,
or
34
resolution
of
any
civil
action,
administrative
proceeding,
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claim,
or
cause
of
action
in
which
the
litigation
financer
has
1
provided
litigation
financing.
The
bill
also
provides
that
a
2
person
who
provides
any
goods
or
renders
any
services
to
the
3
consumer
shall
not
have
a
financial
interest
in
litigation
4
financing.
5
The
bill
provides
the
terms,
conditions,
and
disclosures
6
required
in
a
litigation
financer
contract.
Upon
execution
7
of
the
contract,
the
litigation
financer
may
not
amend
any
8
terms
or
conditions
of
the
contract
without
full
disclosure
and
9
written
consent
of
all
parties.
10
The
bill
provides
that
a
consumer
or
legal
representative
11
of
a
consumer,
unless
otherwise
stipulated
or
ordered
by
the
12
court,
shall
disclose
and
deliver
the
litigation
financing
13
contract
to
each
party
of
the
matter,
the
court,
and
any
known
14
person
with
a
contractual
obligation
in
the
matter.
15
The
bill
provides
exemptions
to
the
new
Code
chapter,
16
including:
(1)
a
nonprofit
organization
that
provides
17
litigation
financing
for
the
benefit
of
the
nonprofit
18
organization
or
one
or
more
of
the
nonprofit
organization’s
19
members;
(2)
an
entity
engaged
in
commerce
or
business
20
activity,
but
only
if
the
entity
does
not:
charge
or
collect
21
any
interest,
fees,
or
other
consideration;
retain
or
receive
22
any
financial
interest
in
the
outcome
of
the
civil
action,
23
administrative
proceeding,
claim,
or
cause
of
action;
and
24
receive
any
right
to
recovery
or
payment
from
the
amount
of
any
25
judgment,
award,
settlement,
verdict,
or
other
form
of
monetary
26
relief
obtained
in
the
matter;
or
(3)
a
regulated
lender
that
27
does
not
receive
a
right
to
receive
payment
from
the
value
of
28
any
proceeds
or
other
consideration
realized
from
any
reward
29
received
or
recovered
in
relation
to
the
matter.
30
The
bill
provides
that
the
new
Code
chapter
applies
to
class
31
actions.
32
The
bill
provides
that
a
litigation
financer
is
jointly
and
33
severally
liable
for
any
award
or
order
imposing
or
assessing
34
costs
or
monetary
sanctions
against
a
consumer
arising
from
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or
relating
to
matters
for
which
the
litigation
financer
is
1
providing
litigation
financing.
2
The
bill
authorizes
the
secretary
of
state
to
adopt
rules
or
3
other
policies
to
enforce
the
new
Code
chapter.
4
The
bill
provides
that
any
violation
of
the
new
Code
chapter
5
by
the
litigation
financer
shall
render
the
contract
void
and
6
may
be
subject
to
penalties.
7
The
bill
takes
effect
on
January
1,
2026,
and
applies
to
8
any
civil
action
or
administrative
proceeding
involving
a
9
litigation
financer
pending
on
or
commenced
after
January
1,
10
2026.
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