AN ACT RELATING TO COMMERCIAL LAW -- GENERAL REGULATORY PROVISIONS -- THIRD-PARTY LITIGATION FINANCING CONSUMER PROTECTION ACT (Provides for "litigation financing" regulation by DBR.)

S2494

2026 -- S 2494
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LC004731
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STATE OF RHODE ISLAND
IN GENERAL ASSEMBLY
JANUARY SESSION, A.D. 2026
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A N A C T
RELATING TO COMMERCIAL LAW -- GENERAL REGULATORY PROVISIONS --
THIRD-PARTY LITIGATION FINANCING CONSUMER PROTECTION ACT

Introduced By:
Senators Gu, Bell, Kallman, and Mack

Date Introduced:
February 06, 2026

Referred To:
Senate Judiciary
It is enacted by the General Assembly as follows:
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SECTION 1. Title 6 of the General Laws entitled "COMMERCIAL LAW — GENERAL
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REGULATORY PROVISIONS" is hereby amended by adding thereto the following chapter:
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CHAPTER 26.2
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THIRD-PARTY LITIGATION FINANCING CONSUMER PROTECTION ACT
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6-26.2-1. Short title.

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This chapter shall be known and may be cited as the “Third-Party Litigation Financing
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Consumer Protection Act.”
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6-26.2-2. Definitions.

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As used in this chapter:
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(1) "Consumer" means any natural person or persons who resides, is present or is domiciled
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in this state, or who is or may become a plaintiff or complainant in a lawsuit or other legal dispute
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in this state.
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(2) "Department" means the department of business regulation established pursuant to §
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42-14-1.
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(3) "Director" means the director of the department of business regulation.
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(4) "Legal representative" means an attorney, group of attorneys, or law firm who may be
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entitled to represent a person or persons in a legal dispute in this state.
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(5) "Litigation financer'' means a person, group of persons, or legal entity, engaged in the

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business of litigation financing or any other mechanism created with the intent of so doing.
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(6) "Litigation financing" means the funding of litigation activities or related claims by
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anyone other than the parties to the claim or litigation themselves, their counsel, or entities with a
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preexisting contractual indemnitor or a liability insurer relationship with one of the parties.
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Litigation financing includes the purchase of bills, accounts or liens or otherwise paying for or
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purchasing services rendered related to claims or litigation.
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(7) "Litigation financing transaction" means a transaction in which litigation financing is
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provided to a consumer, legal representative, or medical provider in return for assigning to the
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litigation financer a contingent right to receive an amount or amounts of the potential proceeds of
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consumer judgments, awards, settlements or verdicts obtained with respect to the consumer's legal
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claim, or agreeing to pay the litigation financer interest, fees or any other consideration for the
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financing provided. The term "litigation financing transaction" does not include legal
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representation services provided to a consumer by a legal representative on a contingency fee basis,
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or legal costs advanced by a legal representative, where such services or costs are provided to or
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on behalf of a consumer by a legal representative in the dispute and in accordance with the Rhode
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Island Disciplinary Rules of Professional Conduct.
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(8) "Medical provider" means any person or business providing medical services of any
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kind to a consumer including, but not limited to, physicians, nurse practitioners, hospitals, physical
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therapists, chiropractors, or radiologists, as well as any of their employees, contractors, practice
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groups, partnerships or incorporations of the same.
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6-26.2-3. Litigation financer - Registration - Bond - Public record.

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(a)(1) No litigation financer shall engage in a litigation financing transaction in Rhode
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Island unless it is registered as a litigation financer in this state.
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(2) A litigation financer that is a business entity or partnership is registered in this state if:
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(i) It has a status of active and in good standing as reflected in the records of the secretary
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of state;
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(ii) Its charter, articles of organization, certificate of limited partnership, or other
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organizational document, or, if a foreign entity, its Rhode Island application for a certificate of
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authority, to do business in this state, contains a statement that it shall be designated as a litigation
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financer pursuant to this chapter; and
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(iii) It files a copy of the regulation on file with the secretary of state pursuant to subsection
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(a)(2)(i) of this section with the department.
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(3) A litigation financer that is not a business entity or partnership is registered in this state
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if it files an application for registration as a litigation financer on a form prescribed by the

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department, along with a filing fee of one hundred dollars ($100), that contains the following:
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(i) Applicant's full legal name;
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(ii) Business name of applicant, if any;
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(iii) Physical street address and mailing address of the applicant;
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(iv) A telephone number through which the applicant can be reached;
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(v) The name, physical street address, mailing address, and telephone number for a Rhode
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Island registered agent appointed to accept service of process on behalf of the applicant;
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(vi) A statement that the applicant shall be designated as a litigation financer pursuant to
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this chapter; and
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(vii) Any other information the department deems necessary.
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(b) Each litigation financer shall file with the department a surety bond of not less than
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fifty thousand dollars ($50,000). The bond shall be payable to this state for the use of the attorney
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general and any person who may have a cause of action against the obligor of the bond for any
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violation of this chapter. The bond shall continue in effect as long as a litigation financer is
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registered as a litigation financer pursuant to the provisions of subsection (a) of this section.
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(c) A litigation financer shall amend its registration with the secretary of state under
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subsection (a) of this section with a copy to the department within thirty (30) days whenever the
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information contained in such record changes or becomes inaccurate or incomplete in any respect.
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A litigation financer that is not a business entity or partnership may amend its registration with the
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department by filing an amendment on a form prescribed by the secretary of state, along with a
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filing fee of twenty dollars ($20.00).
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(d) All documents filed pursuant to this section shall be a public record.
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6-26.2-4. Litigation financing protections.

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(a) A litigation financer shall not:
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(1) Pay or offer commissions, referral fees or other forms of consideration to any legal
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representative, medical provider, or any of their employees for referring a consumer to a litigation
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financer;
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(2) Accept any commissions, referral fees, rebates or other forms of consideration from a
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legal representative, medical provider or any of their employees;
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(3) Advertise false or misleading information regarding its products or services;
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(4) Refer a consumer or potential consumer to a specific legal representative, medical
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provider or any of their employees;
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(5) Fail to promptly supply copies of any complete litigation financing contracts to the
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consumer and the consumer's legal representative;

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(6) Attempt to secure a remedy or obtain a waiver of any remedy including, but not limited
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to, compensatory, statutory, or punitive damages, that the consumer might otherwise be or not be
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entitled to pursue;
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(7) Attempt to effect arbitration or otherwise effect waiver of a consumer's right to trial by
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jury;
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(8) Offer or provide legal advice to the consumer regarding the litigation financing or the
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underlying dispute;
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(9) Assign, which includes securitizing, a litigation financing contract in whole or in part;
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(10) Report a consumer to a credit reporting agency if insufficient funds remain from the
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net proceeds to repay the litigation financer; or
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(11) Receive or exercise any right to direct, or make any decisions with respect to, the
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conduct of the consumer's legal claim or any settlement or resolution thereof. The right to make
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such decisions shall remain solely with the consumer and their legal representative.
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(b) A legal representative retained by a consumer, or a medical provider for such consumer,
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or any of their employees shall not have a financial interest in litigation financing and shall not
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receive a referral fee or other consideration from any litigation financer, its employees, owners or
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its affiliates.
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6-26.2-5. Litigation financing contracts - Disclosures.

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(a) The terms of the litigation financing agreement shall be set forth in a written contract
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that is completely filled in. There shall be no incomplete sections when the contract is offered or
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presented to the consumer, legal representative, or medical provider.
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(b) Litigation financing contracts shall contain the disclosures specified in this section,
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which shall constitute material terms of the litigation financing contract.
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(c) These disclosures shall be typed in at least fourteen (14) point, bold font and be placed
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clearly and conspicuously immediately above the consumer's signature line in the litigation
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financing contract. The disclosures are as is follows:
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(1) Consumer's right to cancellation: You may cancel this contract without penalty or
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further obligation within five (5) business days from the date you signed this contract or received
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financing from [insert name of the litigation financer] by either returning the funds to [insert name,
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office address and office hours of the litigation financer] or by U.S. mail, [insert name and mailing
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address of litigation financer]. For return by U.S. mail, the postmark date on the returned funds or,
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if mailed by registered or certified mail, the date of the return receipt requested shall be the date of
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return;
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(2) The fees charged pursuant to this agreement shall not exceed [litigation financer to

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insert annual interest percentage rate, percentage of award or settlement proceeds, or dollar
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amount];
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(3) The litigation financer agrees that it has no right to and shall not make any decisions
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about the conduct of your lawsuit or dispute and that the right to make those decisions remains
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solely with you and your legal representative;
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(4) If there is no recovery of any money from your legal claim or if there is not enough
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money to satisfy the portion assigned to [insert name of the litigation financer] in full, you will not
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owe anything in excess of your recovery; and
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(5) Do not sign this contract before you read it completely. If this contract contains any
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incomplete sections, you are entitled to a completely filled-in copy of the contract prior to signing
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it. Before you sign this contract, you should obtain the advice of an attorney. Depending on the
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circumstances, you may want to consult a tax advisor, a financial professional or an accountant."
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(d) If the consumer is represented by a legal representative in the dispute that is the subject
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of the litigation financing contract, the legal representative shall acknowledge in the contract that
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they or their employer or employees have neither received nor paid a referral fee or any other
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consideration from or to the litigation financer, nor will in the future do so.
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(e) If the consumer's legal representative is a party to a litigation financing agreement
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related to the consumer's legal proceeding, the legal representative shall share with the consumer
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the agreement between the legal representative and the litigation financer. The agreement shall be
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accompanied by the disclosures required by this section, and the consumer shall sign both an
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acknowledgement that the agreement has been read and the required disclosures.
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6-26.2-6. Disclosure of financing agreements – Discovery.

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(a) Except as otherwise stipulated or ordered by the court, a consumer or their legal
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representative shall, without awaiting a discovery request, provide to all parties to the litigation,
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including their insurer if prior to litigation, any litigation financing contract or agreement under
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which anyone, other than a legal representative permitted to charge a contingent fee representing a
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party, has received or has a right to receive compensation or proceeds from the consumer that are
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contingent on and sourced from any proceeds of the civil action, by settlement, judgment, or
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otherwise.
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(b) The existence of litigation financing, litigation financing transactions and all
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participants in such financing arrangements are permissible subjects of discovery in all personal
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injury litigation or matters arising out of personal injuries.
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6-26.2-7. Annual reporting.

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(a) Each litigation financer shall file a report annually with the department in accordance

LC004731 - Page 5 of 8
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with such procedures as the director mandates. The report shall contain at least the following:
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(1) For each person that, directly or indirectly, owns, controls, holds with the power to vote,
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or holds proxies representing, five percent (5%) or more of the voting securities of the litigation
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financer:
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(i) The legal name and address of each person;
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(ii) If the person is an individual, their principal occupation and offices and positions held
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during the past five (5) years, and any conviction of crimes other than minor traffic violations
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during the past ten (10) years; and
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(iii) If the person is not an individual, a report of the nature of its business operations during
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the past five (5) years or for the lesser period as the person and any predecessors shall have been in
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existence; a narrative description of the business intended to be done by the person and the person's
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subsidiaries; and a list of all individuals who are or who have been selected to become directors or
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executive officers of the person. The list shall include for each individual the information required
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by subsection (a)(2) of this section.
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(2) For each litigation financing transaction entered in this state or involving a claim to be
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litigated in this state, the litigation financer shall identify:
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(i) The amount, date(s) of payment(s), and name and address of each person that received
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any amount of financing from a litigation financer during the previous calendar year;
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(ii) The amount, date of payment, and source of payment for all proceeds obtained by the
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litigation financer during the previous calendar year from any judgment, award, settlement or
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verdict in a litigation financing transaction; and
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(iii) Any other information the department deems necessary for the administration of
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justice.
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(b) Director reporting obligations:
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(1) The director shall provide to the house and senate judiciary committees an annual report
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within six (6) months of the receipt of the information in subsection (a) of this section, containing
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all of the information therein and a summary. This report as filed shall not be made available to the
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public and shall be confidential by law and privileged, shall not be subject to the provisions of
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chapter 2 of title 38 ("public records"), shall not be subject to subpoena, and shall not be subject to
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discovery or admissible in evidence in any private civil action.
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(2) The director shall release the report and summary required pursuant to subsection (b)(l)
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of this section to the public subject to the removal of all personally identifiable information of any
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consumer. Nothing in this subsection shall affect the obligation to disclose litigation financing
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contracts or other agreements under § 6-26.2-6.

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6-26.2-8. Class action lawsuits.

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This chapter shall apply to any class action. Putative class members and the court shall be
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advised that the proposed class attorney has a legal or financial relationship with a litigation
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financer.
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6-26.2-9. Commercial litigation exemption - Limitation.

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This chapter shall not apply to litigation financing provided to commercial enterprises in
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support of commercial litigation. This exemption does not apply to situations arising from a
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personal injury claim or an aggregation of personal injury claims, whether by subrogation,
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assignment, or any other basis.
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6-26.2-10. Regulatory oversight.

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The practice of litigation financing shall be regulated by the director. The director shall
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promulgate rules and regulations to implement and enforce the provisions of this chapter.
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6-26.2-11. Act violation - Unenforceable contract.

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Any violation of this chapter or the rules and regulations promulgated pursuant to § 6-26.2-
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10 shall make the litigation financing contract unenforceable by the litigation financer against the
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consumer, or by any successor-in-interest to the litigation financing contract.
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SECTION 3. This act shall take effect upon passage.
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LC004731
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EXPLANATION
BY THE LEGISLATIVE COUNCIL
OF
A N A C T
RELATING TO COMMERCIAL LAW -- GENERAL REGULATORY PROVISIONS --
THIRD-PARTY LITIGATION FINANCING CONSUMER PROTECTION ACT
***
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This act would comprehensively regulate the practices of third-party litigation financers in
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Rhode Island. Regulatory authority would be established in the department of business regulation.
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A violation of the provisions of this chapter or the rules and regulations promulgated to implement
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and enforce the provisions of this chapter would render the litigation financing contract
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unenforceable.
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This act would take effect upon passage.
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LC004731
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