Third Party Litigation Funding Amendments

53
13-57-101
13-57-102
13-57-201
13-57-202
13-57-203
13-57-301
13-57-302
13-57-501
13-57-504
13-57-601
HB0280
SB0038
13-57-202 (05/06/26)
2
Third Party Litigation Funding Amendments
2026 GENERAL SESSION
STATE OF UTAH
Chief Sponsor: James A. Dunnigan
Senate Sponsor: Brady Brammer
LONG TITLE
General Description:
This bill modifies provisions related to maintenance funding agreements.
Highlighted Provisions:
This bill:
defines terms;
distinguishes between consumer maintenance funding agreements and commercial
maintenance funding agreements;
requires maintenance funding providers to register with the Division of Consumer
Protection;
extends the right of rescission for a consumer maintenance funding agreement;
imposes disclosure requirements in connection with consumer and commercial
maintenance funding agreements;
restricts certain relationships between attorneys and maintenance funding providers;
prohibits maintenance funding arrangements involving foreign entities or persons of
concern;
establishes priority and assignability provisions relating to maintenance funding interests;
restricts a commercial maintenance funding provider from directing or controlling
litigation decisions;
provides for enforcement, penalties, and rulemaking;
provides a coordination clause to substantively and technically coordinate changes
between this bill and S.B. 38, Consumer Protection Modifications; and
makes technical and conforming changes
.
Money Appropriated in this Bill:
None
Other Special Clauses:
This bill provides a coordination clause.
Utah Code Sections Affected:
AMENDS:
13-57-102
, as enacted by Laws of Utah 2020, Chapter 118
13-57-201
, as enacted by Laws of Utah 2020, Chapter 118
13-57-202
, as enacted by Laws of Utah 2020, Chapter 118
13-57-203
, as enacted by Laws of Utah 2020, Chapter 118
13-57-301
, as enacted by Laws of Utah 2020, Chapter 118
13-57-302
, as enacted by Laws of Utah 2020, Chapter 118
13-57-501
, as enacted by Laws of Utah 2020, Chapter 118
ENACTS:
13-57-504
, Utah Code Annotated 1953
13-57-601
, Utah Code Annotated 1953
REPEALS:
13-57-101
, as enacted by Laws of Utah 2020, Chapter 118
Utah Code Sections Affected by Coordination Clause:

13-57-201
, as enacted by Laws of Utah 2020, Chapter 118
13-57-202 (05/06/26)
, as enacted by Laws of Utah 2020, Chapter 118

13-57-203
, as enacted by Laws of Utah 2020, Chapter 118
Be it enacted by the Legislature of the state of Utah:
Section 1. Section
13-57-102
is amended to read:
13-57-102
. Definitions.
As used in this chapter:
(1)
"Business entity" means a sole proprietorship, partnership, limited partnership, limited
liability company, corporation, or other entity or association used to carry on a business
for profit.
(2)
(a)
"Commercial maintenance funding agreement" means a written agreement:
(i)
whereby a third party agrees to provide funds to a named party affiliated with a
legal claim; and
(ii)
that creates a direct or collateralized interest in the proceeds of a legal claim by
settlement, verdict, judgment, or otherwise, which interest is based in whole or in
part on a funding-based obligation to a legal claim.
(b)
"Commercial maintenance funding agreement" does not include:
(i)
a consumer maintenance funding agreement;
(ii)
an agreement between an attorney and a client for the attorney to provide legal
services on a contingency-fee basis or to advance the clients legal costs;
(iii)
a health insurance plan or agreement;
(iv)
a repayment agreement with a financial institution if the repayment is not
contingent upon the outcome of the legal claim;
(v)
a funding agreement to a nonprofit organization that represents a client on a pro
bono basis;
(vi)
an agreement of an assigned claim to prosecute an environmental contamination
matter seeking remediation of, or to recover the cost of remediating, a site that has
been on the U.S. Environmental Protection Agency's Superfund National
Priorities List;
(vii)
an agreement between a health care provider and a patient to provide medical
treatment on a lien if the repayment is not contingent on the outcome of the legal
claim; or
(viii)
an agreement between a third party and a party to a legal claim to provide
funding for medical treatment related to a legal claim on a lien if the repayment is
not contingent upon the outcome of the legal claim.
(3)
(a)
"Commercial maintenance funding provider" means a person that enters into a
commercial maintenance funding agreement with a party to a legal claim.
(b)
"Commercial maintenance funding provider" does not include a nonprofit
organization exempt from federal income tax under Section 501(c)(3) of the Internal
Revenue Code.
(4)
"Consumer" means:
(a)
an individual who resides or is domiciled in the state;
(b)
an individual who is a plaintiff with a legal claim in the state; or
(c)
an estate for a decedent in a wrongful death claim in the state.
(5)
(a)
"Consumer maintenance funding agreement" means a non-recourse transaction in
which a consumer maintenance funding provider purchases contingent rights to
receive an amount of the potential proceeds of a settlement, judgment, award, or
verdict obtained in the consumer's legal claim, with funds paid directly to the
consumer.
(b)
"Consumer maintenance funding agreement" does not include:
(i)
an agreement between a health care provider and a patient for providing medical
treatment on a lien basis if repayment is not contingent on the outcome of the
legal claim; or
(ii)
an agreement between a third party and a party to a legal claim for providing
funds for medical treatment related to the legal claim on a lien basis if repayment
is not contingent on the outcome of the legal claim.
(6)
(a)
"Consumer maintenance funding provider" means a person that enters into a
consumer maintenance funding agreement with a consumer.
(b)
"Consumer maintenance funding provider" does not include:
(i)
an immediate family member of a consumer;
(ii)
an accountant providing accounting services to a consumer;
(iii)
an attorney providing legal services to a consumer; or
(iv)
a bank, lender, financing entity, or other special purpose entity:
(A)
that provides financing to a consumer litigation funding company; or
(B)
to which a consumer litigation funding company grants a security interest or
transfers a right or interest in a consumer litigation funding agreement.
(2)
(7)
"Director" means the director of the Division of Consumer Protection.
(3)
(8)
"Division" means the Division of Consumer Protection of the Department of
Commerce established in Section
13-2-1
.
(4)
(9)
"Foreign country or person of concern" means:
(a)
a foreign government or person listed in 15 C.F.R. Sec. 791.4; or
(b)
an entity designated as a restricted foreign entity in accordance with Section
63L-13-101
.
(10)
(a)
"Foreign entity of concern" means a partnership, association, corporation,
organization, or other legal entity that:
(i)
is organized or incorporated in a foreign country of concern;
(ii)
is owned or operated by a government, a political subdivision, or a political party
of a foreign country of concern
;
(iii)
has a principal place of business in a foreign country of concern; or
(iv)
a foreign organization owns, organizes, or controls that:
(A)
is on the federal Office of Foreign Assets Control specially designated
nationals and blocked persons list; or
(B)
the United States Secretary of State designates as a foreign terrorist
organization.
(b)
"Foreign entity of concern" includes an individual that owns, has a controlling
interest in, or is a director or senior officer of any entity that falls within Subsection
(10)(a)
.
(11)
"Health care provider" means the same as that term is defined in Section
78B-3-403
.
(5)
"Individual" means a person who:
(a)
resides in this state; and
(b)
has or may have a pending legal action in this state.
(6)
"Legal funding" means a payment of $500,000 or less to an individual in exchange for
the right to receive an amount out of the potential proceeds of any realized settlement,
judgment, award, or verdict the individual may receive in a civil legal action.
(7)
"Maintenance funding agreement" means an agreement between an individual and a
maintenance funding provider under which the maintenance funding provider provides
legal funding to the individual.
(8)
(a)
"Maintenance funding provider" means a business entity that engages in the
business of legal funding.
(b)
"Maintenance funding provider" does not include:
(i)
an immediate family member of an individual;
(ii)
an accountant providing accounting services to an individual; or
(iii)
an attorney providing legal services to an individual.
(12)
"Maintenance funding provider" means a consumer maintenance funding provider or a
commercial maintenance funding provider.
The following section is affected by a coordination clause at the end of this bill.
Section 2. Section
13-57-201
is amended to read:
13-57-201
. Maintenance funding provider registration and registration renewal.
(1)
Except as provided in Subsection
(4)
, a business entity may not act as a maintenance
funding provider in this state without
regis
tering with the division.
(1)
(a)
A person may not act as a consumer maintenance funding provider in this state
without registering with the division.
(b)
A person who regularly engages as a commercial maintenance funding provider may
not act as a commercial maintenance funding provider in this state without
registering with the division.
(2)
To register as a maintenance funding provider, a
business entity
person
shall submit to
the division an application for registration:
(a)
in the manner the division determines; and
(b)
that includes:
(i)
an application fee in an amount determined by the division in accordance with
Sections
13-1-2
and
63J-1-504
; and
(ii)
anything else the division requires as established in rule made in accordance with
Title 63G, Chapter 3, Utah Administrative Rulemaking Act
.
(3)
Each year a maintenance funding provider shall renew the maintenance funding
provider's registration by submitting to the division an application for registration
renewal:
(a)
in the manner the division determines; and
(b)
that includes:
(i)
an application fee in an amount determined by the division in accordance with
Sections
13-1-2
and
63J-1-504
; and
(ii)
anything else the division requires as established in rule made in accordance with
Title 63G, Chapter 3, Utah Administrative Rulemaking Act
.
(4)
A business entity who acts as a maintenance funding provider in the state between May
12, 2019, and May 12, 2020, is permitted to continue to act as a maintenance funding
provider:
(a)
if the person:
(i)
applies for registration in accordance with this section; and
(ii)
complies with the requirements of this chapter; and
(b)
until the division makes a determination regarding the person's application for
registration under this section.
The following section is affected by a coordination clause at the end of this bill.
Section 3. Section
13-57-202
is amended to read:
13-57-202
. Consumer maintenance funding provider operations.
(1)
A
consumer
maintenance funding provider may only provide legal funding to
an
individual
a consumer
if the
maintenance funding
consumer maintenance funding
provider and the
individual
consumer
enter into a
consumer
maintenance funding
agreement that meets the requirements of Section
13-57-301
.
(2)
Before executing a
consumer
maintenance funding agreement, a
consumer
maintenance
funding provider shall file with the division a template of the
consumer
maintenance
funding agreement.
(3)
A
consumer
maintenance funding provider may not:
(a)
pay or offer to pay a commission, referral fee, or any other form of consideration to
the following for referring
an individual
a consumer
to the
consumer
maintenance
funding provider:
(i)
an attorney authorized to practice law;
(ii)
a health care provider; or
(iii)
an employee, independent contractor, or other person affiliated with a person
described in Subsection
(3)(a)(i)
or
(ii)
;
(b)
accept a commission, referral fee, or any other form of consideration from a person
described in Subsection
(3)(a)
for referring
an individual
a consumer
to the person;
(c)
refer
an individual
a consumer
or potential
individual
consumer
to a person
described in Subsection
(3)(a)
, unless the referral is to a local or state bar association
referral service;
(d)
intentionally advertise materially false or misleading information about the
consumer

maintenance funding provider's services;
(e)
make or attempt to influence a decision relating to the conduct, settlement, or
resolution of a legal action for which the maintenance funding provider provides
legal funding;
or
(f)
knowingly pay or offer to pay court costs, filing fees, or attorney fees using legal
funding
.
; or
(g)
attempt to obtain a waiver of a remedy or right from the consumer, including the
right to trial by jury.
(4)
A
consumer
maintenance funding provider shall provide
an individual
a consumer
who
enters a
consumer
maintenance funding agreement a copy of the executed
consumer
maintenance funding agreement.
(5)
A consumer maintenance funding provider may not offer maintenance funding to a
consumer who has retained, or been referred by, an attorney or law firm that has a
financial interest in the consumer maintenance funding provider.
(6)
A consumer maintenance funding provider may not enter into a consumer maintenance
funding agreement directly or indirectly with a foreign entity of concern or a foreign
country or person of concern.
The following section is affected by a coordination clause at the end of this bill.
Section 4. Section
13-57-203
is amended to read:
13-57-203
. Annual reports.
(1)
On or before April 1 of each year, a maintenance funding provider registered in
accordance with Section
13-57-201
shall file a report:
(a)
under oath;
(b)
with the director; and
(c)
in a form the director prescribes.
(2)
The report described in Subsection
(1)
shall include, for the preceding calendar year:
(a)
the number of
consumer
maintenance funding agreements
and commercial
maintenance funding agreements
entered into by the maintenance funding provider;
(b)
the total dollar amount of
legal
funding the maintenance funding provider provided;
(c)
the total dollar amount of charges under each
consumer
maintenance funding
agreement
and each commercial maintenance funding agreement
, itemized and
including the annual rate of return;
(d)
the total dollar amount and number of
maintenance
funding transactions in which
the realized profit to the
company
maintenance funding provider
was as contracted

in the maintenance funding agreement
;
(e)
the total dollar amount and number of
maintenance
funding transactions in which
the realized profit to the
company
maintenance funding provider
was less than
contracted; and
(f)
any other information the director requires concerning the maintenance funding
provider's business or operations in the state.
Section 5. Section
13-57-301
is amended to read:
13-57-301
. Consumer maintenance funding agreements.
(1)
A
consumer
maintenance funding agreement shall:
(a)
be in writing;
(b)
be written in a clear and coherent manner using words with common, everyday
meanings so that the average consumer, who makes a reasonable effort under
ordinary circumstances, can read and understand the terms of the consumer
maintenance funding agreement without requiring the assistance of a professional;
(c)
be complete before the consumer signs the consumer maintenance funding
agreement;
(b)
(d)
contain a right of rescission permitting the
individual
consumer
to cancel the
agreement
consumer maintenance funding agreement
without penalty or further
obligation, if the
individual
consumer
returns to the
consumer
maintenance funding
provider the full amount of the disbursed funds:
(i)
within
five
10
business days after the day on which the
individual
consumer
and
consumer
maintenance funding provider enter the agreement; and
(ii)
(A)
in person by delivering the
consumer
maintenance funding provider's
uncashed check to the
consumer
maintenance funding provider's office; or
(B)
by insured, certified, or registered United States mail to the address specified
in the
consumer
maintenance funding agreement in the form of the
consumer
maintenance funding provider's uncashed check or a registered or certified
check or money order;
(c)
(e)
contain the disclosures described in Section
13-57-302
;
(d)
(f)
include the amount of money the
consumer
maintenance funding provider
provides to the
individual
consumer
;
(e)
(g)
include an itemization of one-time charges;
(f)
(h)
include a payment schedule that:
(i)
includes the funded amount and all charges; and
(ii)
lists the total amount of any realized settlement, judgment, award, or verdict to be
paid to the
consumer
maintenance funding provider at the end of each six-month
period, if the
contract
consumer maintenance funding agreement
is satisfied
during that period;
and
(g)
(i)
include a provision that the
consumer
maintenance funding agreement includes
no charge or fee other than the charges and fees disclosed in the
maintenance
funding
agreement;
and
(h)
(j)
include a provision that:
(i)
if there are no available proceeds from the legal action, the
individual
consumer

will owe the
consumer
maintenance funding provider nothing; and
(ii)
the
consumer
maintenance funding provider's total charges will be paid only to
the extent there are available proceeds from the legal action after the settlement of
all liens, fees, and other costs
.
; and
(k)
if the consumer seeks more than one consumer maintenance funding agreement from
the same company, a disclosure providing the cumulative amount due from the
consumer for all transactions, including charges under all consumer maintenance
funding agreements, if repayment is made any time after the consumer maintenance
funding agreements are executed.
(2)
A
consumer
maintenance funding agreement may not require
an individual
a consumer

to make a payment to the
consumer
maintenance funding provider in an amount
determined as a percentage of the recovery from the legal action.
(3)
A consumer maintenance funding agreement is not valid unless the agreement includes
a written certification signed by the consumer stating that:
(a)
the consumer, with the consumer's attorney, reviewed the mandatory disclosures in
Section
13-57-302
;
(b)
the consumer is represented by an attorney in the legal claim on a contingency fee
basis in accordance with a written fee agreement;
(c)
the consumer will direct the consumer's attorney to receive and disburse all proceeds
of the legal claim through the attorney's trust account or a settlement fund established
for the benefit of the consumer; and
(d)
the consumer will direct the consumer's attorney to disburse funds in accordance
with the terms of the consumer maintenance funding agreement.
(4)
(a)
The consumer maintenance funding agreement is null and void if the consumer
does not provide the acknowledgment Subsection
(3)
requires.
(b)
The consumer maintenance funding agreement remains valid and enforceable if the
consumer terminates an attorney or law firm that the consumer retains.
(5)
A consumer maintenance funding provider may not charge or collect a prepayment
penalty or fee.
Section 6. Section
13-57-302
is amended to read:
13-57-302
. Required disclosures.
A
consumer
maintenance funding provider shall disclose in a
consumer
maintenance
funding agreement:
(1)
that the
consumer
maintenance funding provider may not participate in deciding
whether, when, or the amount for which a legal action is settled;
(2)
that the maintenance funding provider may not interfere with the independent
professional judgment of the attorney handling the legal action or any settlement of the
legal action;
(3)
the following statement in substantially the following form, in all capital letters and at
least a 12-point type: "THE FUNDED AMOUNT AND AGREED-TO CHARGES
SHALL BE PAID ONLY FROM THE PROCEEDS OF YOUR LEGAL CLAIM, AND
SHALL BE PAID ONLY TO THE EXTENT THAT THERE ARE AVAILABLE
PROCEEDS FROM YOUR LEGAL CLAIM. YOU WILL NOT OWE (INSERT
NAME OF THE
CONSUMER
MAINTENANCE FUNDING PROVIDER HERE)
ANYTHING IF THERE ARE NO PROCEEDS FROM YOUR LEGAL CLAIM,
UNLESS YOU HAVE VIOLATED A MATERIAL TERM OF THIS AGREEMENT
OR YOU HAVE COMMITTED FRAUD AGAINST THE
CONSUMER
MAINTENANCE FUNDING PROVIDER.";
(4)
in accordance with Section
13-57-301
, the following statement in substantially the
following form and at least a 12-point type: "CONSUMER'S RIGHT TO
CANCELLATION: You may cancel this agreement without penalty or further
obligation within
five
1
0

business days after the day on which you enter into this
agreement with the
consumer
maintenance funding provider if you either: 1. return to
the
consumer
maintenance funding provider the full amount of the disbursed funds by
delivering the
consumer
maintenance funding provider's uncashed check to the
consumer
maintenance funding provider's office in person; or 2. send, by insured,
certified, or registered United States mail, to the
consumer
maintenance funding
provider at the address specified in this agreement, a notice of cancellation and include
in the mailing a return of the full amount of disbursed funds in the form of the
consumer
maintenance funding provider's uncashed check or a registered or certified check or
money order"; and
(5)
immediately above the line for the
individual's
consumer's
signature, the following
statement in at least a 12-point type: "Do not sign this agreement before you read it
completely or if it contains any blank spaces. You are entitled to a completed copy of
the agreement. Before you sign this agreement, you should obtain the advice of an
attorney. Depending on your circumstances, you may want to consult a tax, benefits
planning, or financial professional."
Section 7. Section
13-57-501
is amended to read:
13-57-501
. Enforceability.
If a maintenance funding provider
willfully
violates a provision of this chapter, a
maintenance funding agreement associated with the violation is unenforceable by the
maintenance funding provider or any successor-in-interest to the maintenance funding
agreement.
Section 8. Section
13-57-504
is enacted to read:
13-57-504
. Assignability -- Liens.
(1)
The contingent right to receive an amount of the potential proceeds of a legal claim is
assignable by a party to a maintenance funding provider.
(2)
Only attorney's liens related to the legal claim that is the subject of the maintenance
funding or Medicare or other statutory liens related to the legal claim take priority over a
lien of the maintenance funding provider.
Section 9. Section
13-57-601
is enacted to read:
13-57-601
. Commercial maintenance funding prohibitions.
(1)
A commercial maintenance funding provider may not enter into a commercial
maintenance funding agreement directly or indirectly with a foreign entity of concern or
a foreign country or person of concern.
(2)
A commercial maintenance funding provider may not receive, access, or use any
documents or information subject to a court order to seal or protect
that the court issues
in the course of the civil proceeding unless a court order specifically allows a
commercial maintenance funding provider to have access to such documents or
information
.
(3)
(a)
A commercial maintenance funding provider may not direct, or have a contractual
right to control, the party or the party's attorney with respect to the conduct of the
underlying legal claim or a settlement or resolution of the legal claim.
(b)
The right to make the decisions Subsection
(3)(a)
describes remains solely with the
party and the party's attorney in the civil proceeding.
Section 10.
Repealer.
Title.
Section 11.
Effective Date.
This bill takes effect on
May 6, 2026
.
Section 12.
Coordinating H.B. 280 with S.B. 38.
If H.B. 280, Third Party Litigation Funding Amendments, and S.B. 38, Consumer
Protection Modifications, both pass and become law, the Legislature intends that, on May 6,
2026, the term "maintenance funding provider" in S.B. 38 be changed to the term "consumer
maintenance funding provider" in the following subsections:
(1) Subsections 13-57-201(3), (5), and (6);
(2) Subsection 13-57-202(3); and
(3) Subsection 13-57-203(1)(a).
3-11-26 9:30 AM