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SECOND REGULAR SESSION
SENATE BILL NO. 881
103RD GENERAL ASSEMBLY
INTRODUCED BY SENATOR TRENT.
5808S.01I KRISTINA MARTIN, Secretary
AN ACT
To amend chapter 436, RSMo, by adding thereto four new sections relating to funding of legal
actions, with penalty provisions.
Be it enacted by the General Assembly of the State of Missouri, as follows:
Section A. Chapter 436, RSMo, is amended by adding thereto 1
four new sections, to be known as sections 436.575, 436.580, 2
436.585, and 436.590, to read as follows:3
436.575. As used in sections 436.575 to 436.590, the 1
following terms mean: 2
(1) "Agent of a foreign principal", any person who 3
acts as an agent, representative, employee, or servant, or 4
any person who acts in any other capacity at the order, 5
request, or under the direction or control, of a foreign 6
principal or of a person any of whose activities are 7
directly or indirectly supervised, directed, controlled, 8
financed, or subsidized in whole or in major part by a 9
foreign principal, and who directly or through any other 10
person acts in the interest of such foreign principal; 11
(2) "Foreign principal", any government, person, or 12
entity described in the definition of "foreign principal" in 13
the Foreign Agents Registration Act of 1938, 22 U.S.C. 611; 14
(3) "Litigation expenses", costs incurred to pursue a 15
civil action, including, but not limited to, court costs, 16
filing fees, attorney's fees, expert witness fees, travel 17
expenses, and expenses related to identifying or soliciting 18
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potential clients to participate in the litigation before, 19
during, or after filing or resolving the civil action; 20
(4) "Litigation funder", a person or entity that 21
enters a litigation funding agreement or any person or 22
entity who has a direct or indirect right to receive 23
compensation from a litigation funding agreement. A 24
litigation funder does not include: 25
(a) A parent, sibling, spouse, grandparent, 26
grandchild, or child related by blood, adoption, or marriage 27
of the party being funded; 28
(b) An attorney who, at the time money is provided to 29
or on behalf of a client under a litigation funding 30
agreement, has an attorney-client relationship with the 31
party concerning the party's civil action; 32
(c) A licensed or registered financial institution 33
that does not receive, in consideration for loaning money to 34
any person, a right to receive payment from the value of any 35
proceeds or other consideration realized from any judgment, 36
award, settlement, verdict, or other form of monetary relief 37
any person may receive or recover in relation to any civil 38
action; 39
(d) A nonprofit entity that provides pro bono legal 40
services to the party with no right to receive payment from 41
the amount of any judgment, award, settlement, verdict, or 42
other form of monetary compensation obtained in the civil 43
action. Court ordered awards of costs or attorney's fees to 44
nonprofit legal organizations shall not be affected by this 45
section; or 46
(e) A person or entity that provides money to a party 47
for litigation solely for purposes other than funding 48
litigation expenses; 49
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(5) "Litigation funding agreement", with respect to 50
any civil action or group of civil actions, any written 51
agreement: 52
(a) Whereby a third party agrees to provide funds to 53
one of the named parties, or any law firm affiliated with 54
the action or group of civil actions; and 55
(b) Which creates a direct or collateralized interest 56
in the proceeds of a civil action or group of civil actions, 57
by settlement, verdict, judgment, or otherwise, and whose 58
interest is based, in whole or in part, on a funding-based 59
obligation to the action or group of actions or the 60
appearing counsel or any contractual co-counsel or the law 61
firms of the counsel or co-counsel executed with: 62
(i) Any attorney representing a party; 63
(ii) Any co-counsel in the litigation with a 64
contingent fee interest in the representation of that party; 65
or 66
(iii) Any third-party who has a collateral-based 67
interest in the contingency fees of the counsel or co- 68
counsel firm related in whole or part to the fees derived 69
from representing that party. 70
436.580. 1. A foreign principal or agent of a foreign 1
principal shall not engage in litigation funding in this 2
state. 3
2. A foreign principal or agent of a foreign principal 4
shall not, directly or indirectly, invest in, finance, fund, 5
or loan money to a litigation funder in this state. 6
3. A person engaged in litigation funding in this 7
state may not, directly or indirectly: 8
(1) Become affiliated with or maintain an affiliation 9
with a principal or agent of a foreign principal; or 10
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(2) Allow a foreign principal or agent of a foreign 11
principal to invest in, maintain an ownership interest in, 12
or exercise any control over a litigation funding agreement 13
or litigation funded through a litigation funding agreement. 14
436.585. 1. A litigation funder shall have a 1
fiduciary duty to a party in a civil action if it has 2
provided litigation funding for that civil action. 3
2. No litigation funder shall engage in any act, 4
practice, or course of business that is inconsistent with 5
the litigation funder's fiduciary duty pursuant to 6
subsection 1 of this section. 7
3. A litigation funder shall be jointly liable for any 8
award or order imposing or assessing costs or monetary 9
sanctions against a funded party or funded party's attorney 10
arising from or relating to the funded civil action. 11
436.590. 1. It shall be an unlawful practice pursuant 1
to section 407.020 to violate any provision of section 2
436.575 to 436.590, and pursuant to sections 407.010 to 3
407.130, the violation shall be subject to penalties, 4
remedies, and procedures provided in sections 407.010 to 5
407.130. The remedies available in this section are 6
cumulative and in addition to any other remedies available 7
by law. 8
2. Any person who willfully and knowingly engages in 9
any act or practice declared to be unlawful by any provision 10
of section 436.580 shall be guilty of a class E felony. 11
3. The attorney general may institute a legal action 12
to prohibit a person who violates any provision of section 13
436.580 or 436.585 from providing litigation funding in this 14
state. 15
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4. A litigation funding agreement that is entered into 16
in violation of section 436.580 is void and unenforceable. 17
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