REFERENCE TITLE: litigation financing; requirements; attorney general State of Arizona House of Representatives Fifty-seventh Legislature First Regular Session 2025 HB 2755 Introduced by Representative Marshall AN ACT Amending title 12, Arizona Revised Statutes, by adding chapter 28; relating to financing agreements. (TEXT OF BILL BEGINS ON NEXT PAGE)
REFERENCE TITLE: litigation financing; requirements; attorney general
State of Arizona House of Representatives Fifty-seventh Legislature First Regular Session 2025
HB 2755
Introduced by Representative Marshall
REFERENCE TITLE: litigation financing; requirements; attorney general
State of Arizona
House of Representatives
Fifty-seventh Legislature
First Regular Session
2025
HB 2755
Introduced by
Representative Marshall
AN ACT
Amending title 12, Arizona Revised Statutes, by adding chapter 28; relating to financing agreements.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona: Section 1. Title 12, Arizona Revised Statutes, is amended by adding chapter 28, to read: CHAPTER 28 LITIGATION FINANCING ARTICLE 1. GENERAL PROVISIONS START_STATUTE12-3501. Definitions In this chapter, unless the context otherwise requires: 1. "Funded action" means a civil action, administrative proceeding, claim or other cause of action for which litigation funding has been provided. 2. "Litigation blind pool" means an investment vehicle into which investors directly invest, but are not told any identifying detail of any current or pending funded action for which litigation financing has been or will be provided. 3. "Litigation financier" means a person that has entered into a litigation financing agreement with a party to an action or counsel of record for a party to an action. 4. "Litigation financing agreement" or "litigation financing": (a) Means any agreement in which a person provides financing, funding, advancing or loaning monies to pay for fees, costs, expenses or any other sums that arise from or in any manner are related to an action in exchange for the right to receive repayment, interest, fees or other consideration that cumulatively exceeds the amount of monies given by the person and that is contingent in any respect on the outcome of an action or on the outcome of any matter within a portfolio that includes the action and involves the same counsel or affiliated counsel. (b) Does not include any of the following loans, agreements, contracts or arrangements that are entered into with or by the following: (i) A named party to the action if payments made to the named party are provided exclusively for personal and family use and are provided on condition that they are not to be used for legal filings, legal document preparation and drafting, appeals, creation of a litigation strategy, drafting testimony or other expenses that are directly related to litigation. (ii) A counsel of record for legal services that are provided on a contingency fee basis or advanced legal costs that are provided by counsel of record, where the services or costs are provided by a legal counsel of record in accordance with the rules of professional conduct that are adopted by the supreme court. (iii) A person with a preexisting contractual obligation to indemnify or defend a party to the action or a health insurer that has paid or is obligated to pay any sums for health care services that are rendered to an injured person under the terms of a health insurance policy, plan or agreement. (iv) A financial institution, as defined in section 6-101, for repayment of loans made directly to a party or a party's counsel if repayment of the loan is not contingent on the outcome of an action by settlement, judgment or otherwise or on the outcome of any matter within a portfolio that includes the action and involves the same counsel or affiliated counsel. (v) Funding that is provided to a nonprofit organization, including those that are exempt from taxation under 501(c)(3) of the United States internal revenue code. (vi) A person that provides funding to a medical practice or facility solely for its receivables. 5. "Person" means any individual or entity of any kind. 6. "Proprietary information" means information that is developed, created or discovered by a person or that became known by or was conveyed to the person, that has commercial value in the person's business, including domain names, trade secrets, copyrights, ideas, techniques, inventions, whether patentable or not, and other information of any type relating to designs, configurations, documentation, recorded data, schematics, circuits, mask works, layouts, source code, object code, master works, master databases, algorithms, flow charts, formulae, works of authorship, mechanisms, research, manufacture, improvements, assembly, installation, intellectual property, including patents and patent applications, and information concerning the person's actual or anticipated business, research or development or that is received in confidence by or for the person from any other source. 7. "Trade secret" has the same meaning prescribed in section 44-401.END_STATUTE START_STATUTE12-3502. Litigation blind pools; confidentiality A. Litigation financiers shall maintain litigation blind pools. B. Maintenance of litigation blind pool investment structures is prima facie evidence of compliance with this section. C. Litigation financiers may not, directly or indirectly, cause any identifying information that concerns any existing, pending or future litigation for which financing has been or may be provided to be disclosed to third parties. D. Litigation financiers may not disclose any of their investors' proprietary information or confidential information or the trade secrets of any party to a funded action. END_STATUTE START_STATUTE12-3503. Enforcement; powers of the attorney general A. Only the attorney general may bring a cause of action under this article. B. If the attorney general has reasonable cause to believe that a person has engaged in, is engaging in or is about to engage in any practice or transaction that violates this article, an order under this article pursuant to section 12-3504 or an assurance of discontinuance, the attorney general may do the following: 1. Require the person to file, on forms prescribed by the attorney general, a statement or report in writing, under oath, regarding the facts and circumstances that concern the sale or advertisement of merchandise by the person, and other data and information that the attorney general deems necessary. 2. Examine under oath any person connected to the sale or advertisement of any merchandise. 3. Examine any record, book, document, account or paper that the attorney general deems necessary. 4. Pursuant to an order of the superior court, impound any record, book, document, account, paper or sample or merchandise material to the practice and retain it in the attorney general's possession until all proceedings undertaken under this article or in the courts are complete.END_STATUTE START_STATUTE12-3504. Assurance of discontinuance of unlawful practice In enforcing this article, the attorney general may accept an assurance of discontinuance of any act or practice deemed to violate this article from any person engaging in, or who has engaged in, such an act or practice. An assurance of discontinuance may include a stipulation that the person pay reasonable expenses incurred by the attorney general or restitution to aggrieved persons, or both. Any assurance of discontinuance shall be in writing and shall be filed with and subject to the approval of the superior court of the county in which the alleged violator resides or has its principal place of business or in Maricopa county. A violation of an assurance of discontinuance within six years after the filing of the assurance of discontinuance constitutes prima facie proof of a violation of this chapter. An assurance of discontinuance may not be considered an admission of a violation for any purpose.END_STATUTE START_STATUTE12-3505. Remedies Following an investigation pursuant to section 11-532, and when it appears to the attorney general that a person has engaged in or is engaging in any practice that is declared to be unlawful by this article, the attorney general, in a court of competent jurisdiction and after providing the notice that is required by the Arizona rules of civil procedure, may seek and obtain an injunction prohibiting the person from continuing the practices, engaging in the practice or doing any acts in furtherance of the practice. The court may make such orders or judgments as may be necessary to do the following: 1. Prevent the use of or employment by a person that engages in any unlawful practices. 2. Restore to any person in interest any monies or real or personal property that may have been acquired by means of any unlawful practice under this article, including appointing a receiver. 3. Prohibit a person found to have violated this article from engaging in a specified trade or occupation. END_STATUTE Sec. 2. Applicability A. This act applies to: 1. All litigation financing within this state, either pending or commenced on or after the effective date of this act. 2. All litigation financiers providing litigation funding within this state. B. This act does not apply to litigation financiers who solely do business outside of this state.
Be it enacted by the Legislature of the State of Arizona:
Section 1. Title 12, Arizona Revised Statutes, is amended by adding chapter 28, to read:
CHAPTER 28
LITIGATION FINANCING
ARTICLE 1. GENERAL PROVISIONS
START_STATUTE12-3501. Definitions
In this chapter, unless the context otherwise requires:
1. "Funded action" means a civil action, administrative proceeding, claim or other cause of action for which litigation funding has been provided.
2. "Litigation blind pool" means an investment vehicle into which investors directly invest, but are not told any identifying detail of any current or pending funded action for which litigation financing has been or will be provided.
3. "Litigation financier" means a person that has entered into a litigation financing agreement with a party to an action or counsel of record for a party to an action.
4. "Litigation financing agreement" or "litigation financing":
(a) Means any agreement in which a person provides financing, funding, advancing or loaning monies to pay for fees, costs, expenses or any other sums that arise from or in any manner are related to an action in exchange for the right to receive repayment, interest, fees or other consideration that cumulatively exceeds the amount of monies given by the person and that is contingent in any respect on the outcome of an action or on the outcome of any matter within a portfolio that includes the action and involves the same counsel or affiliated counsel.
(b) Does not include any of the following loans, agreements, contracts or arrangements that are entered into with or by the following:
(i) A named party to the action if payments made to the named party are provided exclusively for personal and family use and are provided on condition that they are not to be used for legal filings, legal document preparation and drafting, appeals, creation of a litigation strategy, drafting testimony or other expenses that are directly related to litigation.
(ii) A counsel of record for legal services that are provided on a contingency fee basis or advanced legal costs that are provided by counsel of record, where the services or costs are provided by a legal counsel of record in accordance with the rules of professional conduct that are adopted by the supreme court.
(iii) A person with a preexisting contractual obligation to indemnify or defend a party to the action or a health insurer that has paid or is obligated to pay any sums for health care services that are rendered to an injured person under the terms of a health insurance policy, plan or agreement.
(iv) A financial institution, as defined in section 6-101, for repayment of loans made directly to a party or a party's counsel if repayment of the loan is not contingent on the outcome of an action by settlement, judgment or otherwise or on the outcome of any matter within a portfolio that includes the action and involves the same counsel or affiliated counsel.
(v) Funding that is provided to a nonprofit organization, including those that are exempt from taxation under 501(c)(3) of the United States internal revenue code.
(vi) A person that provides funding to a medical practice or facility solely for its receivables.
5. "Person" means any individual or entity of any kind.
6. "Proprietary information" means information that is developed, created or discovered by a person or that became known by or was conveyed to the person, that has commercial value in the person's business, including domain names, trade secrets, copyrights, ideas, techniques, inventions, whether patentable or not, and other information of any type relating to designs, configurations, documentation, recorded data, schematics, circuits, mask works, layouts, source code, object code, master works, master databases, algorithms, flow charts, formulae, works of authorship, mechanisms, research, manufacture, improvements, assembly, installation, intellectual property, including patents and patent applications, and information concerning the person's actual or anticipated business, research or development or that is received in confidence by or for the person from any other source.
7. "Trade secret" has the same meaning prescribed in section 44-401.END_STATUTE
START_STATUTE12-3502. Litigation blind pools; confidentiality
A. Litigation financiers shall maintain litigation blind pools.
B. Maintenance of litigation blind pool investment structures is prima facie evidence of compliance with this section.
C. Litigation financiers may not, directly or indirectly, cause any identifying information that concerns any existing, pending or future litigation for which financing has been or may be provided to be disclosed to third parties.
D. Litigation financiers may not disclose any of their investors' proprietary information or confidential information or the trade secrets of any party to a funded action. END_STATUTE
START_STATUTE12-3503. Enforcement; powers of the attorney general
A. Only the attorney general may bring a cause of action under this article.
B. If the attorney general has reasonable cause to believe that a person has engaged in, is engaging in or is about to engage in any practice or transaction that violates this article, an order under this article pursuant to section 12-3504 or an assurance of discontinuance, the attorney general may do the following:
1. Require the person to file, on forms prescribed by the attorney general, a statement or report in writing, under oath, regarding the facts and circumstances that concern the sale or advertisement of merchandise by the person, and other data and information that the attorney general deems necessary.
2. Examine under oath any person connected to the sale or advertisement of any merchandise.
3. Examine any record, book, document, account or paper that the attorney general deems necessary.
4. Pursuant to an order of the superior court, impound any record, book, document, account, paper or sample or merchandise material to the practice and retain it in the attorney general's possession until all proceedings undertaken under this article or in the courts are complete.END_STATUTE
START_STATUTE12-3504. Assurance of discontinuance of unlawful practice
In enforcing this article, the attorney general may accept an assurance of discontinuance of any act or practice deemed to violate this article from any person engaging in, or who has engaged in, such an act or practice. An assurance of discontinuance may include a stipulation that the person pay reasonable expenses incurred by the attorney general or restitution to aggrieved persons, or both. Any assurance of discontinuance shall be in writing and shall be filed with and subject to the approval of the superior court of the county in which the alleged violator resides or has its principal place of business or in Maricopa county. A violation of an assurance of discontinuance within six years after the filing of the assurance of discontinuance constitutes prima facie proof of a violation of this chapter. An assurance of discontinuance may not be considered an admission of a violation for any purpose.END_STATUTE
START_STATUTE12-3505. Remedies
Following an investigation pursuant to section 11-532, and when it appears to the attorney general that a person has engaged in or is engaging in any practice that is declared to be unlawful by this article, the attorney general, in a court of competent jurisdiction and after providing the notice that is required by the Arizona rules of civil procedure, may seek and obtain an injunction prohibiting the person from continuing the practices, engaging in the practice or doing any acts in furtherance of the practice. The court may make such orders or judgments as may be necessary to do the following:
1. Prevent the use of or employment by a person that engages in any unlawful practices.
2. Restore to any person in interest any monies or real or personal property that may have been acquired by means of any unlawful practice under this article, including appointing a receiver.
3. Prohibit a person found to have violated this article from engaging in a specified trade or occupation. END_STATUTE
Sec. 2. Applicability
A. This act applies to:
1. All litigation financing within this state, either pending or commenced on or after the effective date of this act.
2. All litigation financiers providing litigation funding within this state.
B. This act does not apply to litigation financiers who solely do business outside of this state.