Florida 2023 Regular Session

Florida House Bill H1447 Compare Versions

Only one version of the bill is available at this time.

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10	10	F L O R I D A H O U S E O F R E P R E S E N T A T I V E S
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14	14	A bill to be entitled 1
15	15	An act relating to litigation financing consumer 2
16	16	protection; creating part VIII of ch. 501, F.S., 3
17	17	entitled "Litigation Financing Consumer Protection 4
18	18	Act"; creating s. 501.1001, F.S.; providing 5
19	19	definitions; creating s. 501.1002, F.S.; requiring 6
20	20	litigation financiers to register with the Department 7
21	21	of State before engaging in litigation financing; 8
22	22	providing registration requirements; requiring 9
23	23	litigation financiers to file a surety bond meeting 10
24	24	specified requirements; requiring the department serve 11
25	25	notice to such financiers and to revoke such 12
26	26	registrations for certain noncompliance; authorizing 13
27	27	the department to adopt rules; creating s. 501.1003, 14
28	28	F.S.; providing requirements for litigation financing 15
29	29	contracts; creating s. 501.1004, F.S.; prohibiting 16
30	30	litigation financiers from engaging in specified 17
31	31	conduct; creating s. 501.1005, F.S.; providing 18
32	32	disclosure requirements for litigation financing 19
33	33	contracts; creating s. 501.1006, F.S.; authorizing 20
34	34	litigation financiers to assess specified interest, 21
35	35	fees, and charges; providing requirements for such 22
36	36	interest, fees, and charges; prohibiting a litigation 23
37	37	financier from assessing specified fees or charges; 24
38	38	creating s. 501.1007, F.S.; providing that specified 25
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47	47	F L O R I D A H O U S E O F R E P R E S E N T A T I V E S
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51	51	communications between attorneys and litigation 26
52	52	financiers do not effect statutory or common -law 27
53	53	privilege; creating s. 501.1008, F.S.; providing that 28
54	54	violations of the act are deceptive and unfair trade 29
55	55	practices; providing construction; providing an 30
56	56	effective date. 31
57	57	32
58	58	Be It Enacted by the Legislature of the State o f Florida: 33
59	59	34
60	60	Section 1. Part VIII of chapter 501, Florida Statutes, 35
61	61	consisting of sections 501.1001, 501.1002, 501.1003, 501.1004, 36
62	62	501.1005, 501.1006, 501.1007, and 501.1008, Florida Statutes, is 37
63	63	created and entitled "Litigation Financing Consumer Prote ction 38
64	64	Act." 39
65	65	Section 2. Section 501.1001, Florida Statutes, is created 40
66	66	to read: 41
67	67	501.1001 Definitions. —As used in this part, the term: 42
68	68	(1) "Consumer" means any individual. 43
69	69	(2) "Department" means the Department of State. 44
70	70	(3) "Funded amount" means the funds actually received and 45
71	71	retained by a consumer under a litigation financing contract. 46
72	72	(4) "Health care practitioner" has the same meaning as in 47
73	73	s. 456.001. 48
74	74	(5) "Interest" means the cost of obtaining litigation 49
75	75	financing and includes any profit or advantage of any kind 50
76	76
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84	84	F L O R I D A H O U S E O F R E P R E S E N T A T I V E S
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86	86
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88	88	whatsoever that a litigation financier may charge, contract for, 51
89	89	collect, receive, or in any way obtain as a condition for a 52
90	90	litigation financing contract. Charges and fees specifically 53
91	91	authorized by this part are not interest. 54
92	92	(6) "Litigation financier" means a person engaged in the 55
93	93	business of litigation financing. 56
94	94	(7) "Litigation financing" means a nonrecourse transaction 57
95	95	in which a litigation financier provides funds to a consumer in 58
96	96	exchange for an assignment of the consume r's contingent right to 59
97	97	receive an amount of the potential net proceeds of the 60
98	98	consumer's civil action or claim. The term does not include: 61
99	99	(a) Legal services provided to a consumer on a contingency 62
100	100	fee basis, or advanced legal costs, where such services or costs 63
101	101	are provided by an attorney representing the consumer in 64
102	102	accordance with the Florida Rules of Professional Conduct; 65
103	103	(b) A commercial tort claim as defined in s. 66
104	104	679.1021(1)(m); 67
105	105	(c) A worker's compensation claim under chapter 440; 68
106	106	(d) Lending or financing arrangements between an attorney 69
107	107	or law firm and a lending institution to fund litigation costs 70
108	108	in the ordinary course of business; or 71
109	109	(e) A consumer finance loan, as defined in s. 516.01(2). 72
110	110	(8) "Net proceeds" means the portion of the proceeds of a 73
111	111	civil action or claim remaining after satisfaction of all liens 74
112	112	with a higher priority than that of the litigation financier as 75
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121	121	F L O R I D A H O U S E O F R E P R E S E N T A T I V E S
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125	125	specified in s. 501.1006(2). 76
126	126	Section 3. Section 501.1002, Florida Statutes, is created 77
127	127	to read: 78
128	128	501.1002 Litigation financier registration; registration 79
129	129	revocation.— 80
130	130	(1) A litigation financier may not engage in litigation 81
131	131	financing in the state before registering as a litigation 82
132	132	financier under this section. 83
133	133	(a) A litigation financier that is a corporat ion, limited 84
134	134	liability company, or partnership is registered under this 85
135	135	section if it has: 86
136	136	1. Met the bond requirements of subsection (2); 87
137	137	2. A status of active and in good standing as reflected in 88
138	138	department records; and 89
139	139	3. Filed articles of organiz ation or incorporation, a 90
140	140	certificate of limited partnership, or another organizational 91
141	141	document, or, if a foreign entity, an application for a 92
142	142	certificate of authority with the department stating therein 93
143	143	that it is a litigation financier. 94
144	144	(b) A litigation financier who is not a corporation, 95
145	145	limited liability company, or partnership is registered under 96
146	146	this section if he or she has: 97
147	147	1. Met the bond requirements of subsection (2); and 98
148	148	2. Filed a litigation financier registration application 99
149	149	with the department on a form prescribed by the department 100
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158	158	F L O R I D A H O U S E O F R E P R E S E N T A T I V E S
159	159
160	160
161	161
162	162	containing, at a minimum: 101
163	163	a. The applicant's full legal name and fictitious name, if 102
164	164	any; 103
165	165	b. The applicant's physical address, mailing address, and 104
166	166	telephone number; 105
167	167	c. A statement that the applicant is a litigation 106
168	168	financier; and 107
169	169	d. Any other information the department deems necessary. 108
170	170	(2) A litigation financier must file with the department a 109
171	171	$250,000 surety bond, which bond must be: 110
172	172	(a) Issued by a surety company authorized to do business 111
173	173	in the state. 112
174	174	(b) Payable to the department for the payment of damages 113
175	175	awarded to a consumer under part II of this chapter. 114
176	176	(c) Effective so long as the department's records 115
177	177	designate the litigation financier as such or a litigation 116
178	178	financing contract with t he litigation financier is effective. 117
179	179	(3) A litigation financier must amend its registration 118
180	180	within 30 days after the date the information contained therein 119
181	181	changes or becomes inaccurate in any respect. A litigation 120
182	182	financier who is not a corporation, li mited liability company, 121
183	183	or partnership may amend his or her registration by filing with 122
184	184	the department an amendment on a form prescribed by the 123
185	185	department. 124
186	186	(4) If the department determines that a litigation 125
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195	195	F L O R I D A H O U S E O F R E P R E S E N T A T I V E S
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197	197
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199	199	financier has not complied with the requiremen ts of this 126
200	200	section, the department shall serve the litigation financier 127
201	201	notice in a record of its intent to revoke the registration of 128
202	202	the litigation financier. Such notice: 129
203	203	(a) Must specifically state all grounds for revocation; 130
204	204	and 131
205	205	(b) May be sent by electronic mail to a litigation 132
206	206	financier that provided the department with an electronic mail 133
207	207	address. 134
208	208	(5) A litigation financier has 60 days after the date the 135
209	209	department sends the notice under subsection (4) to correct the 136
210	210	grounds for revocation or d emonstrate to the reasonable 137
211	211	satisfaction of the department that each ground determined by 138
212	212	the department does not exist. The department shall revoke the 139
213	213	litigation financier registration of any litigation financier 140
214	214	who fails to comply with the requirement s of this section. 141
215	215	(6) The department has the authority reasonably necessary 142
216	216	to enable it to administer this section efficiently, to perform 143
217	217	duties imposed upon it, and to adopt rules to implement this 144
218	218	section. 145
219	219	Section 4. Section 501.1003, Florida St atutes, is created 146
220	220	to read: 147
221	221	501.1003 Litigation financing contracts; terms. —The 148
222	222	litigation financing terms must be set forth in a written 149
223	223	contract containing: 150
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232	232	F L O R I D A H O U S E O F R E P R E S E N T A T I V E S
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236	236	(1) A right of rescission allowing the consumer to cancel 151
237	237	the contract without penalty, interest, fees, charges, or 152
238	238	further obligation if, within 5 business days after execution of 153
239	239	a contract or receipt of funds by the consumer, whichever is 154
240	240	later, the consumer provides written rescission notice and 155
241	241	returns any funds already provided under th e contract to the 156
242	242	litigation financier; 157
243	243	(2) The consumer's written acknowledgement of whether an 158
244	244	attorney represents him or her in the civil action or claim that 159
245	245	is the subject of the contract; and 160
246	246	(3) A statement indicating that, in the event the proc eeds 161
247	247	of the subject civil action or claim are paid into a settlement 162
248	248	fund or trust, the litigation financier must notify the fund or 163
249	249	trust administrator of any outstanding financial obligations 164
250	250	arising from the contract. 165
251	251	Section 5. Section 501.1004, Fl orida Statutes, is created 166
252	252	to read: 167
253	253	501.1004 Prohibited conduct. —A litigation financier may 168
254	254	not: 169
255	255	(1) Pay or offer to pay a commission, referral fee, or 170
256	256	other consideration to any person, including an attorney, law 171
257	257	firm, or health care practitioner, for referring a consumer to a 172
258	258	litigation financier; 173
259	259	(2) Accept a commission, referral fee, rebate, or other 174
260	260	consideration from any person, including an attorney, law firm, 175
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269	269	F L O R I D A H O U S E O F R E P R E S E N T A T I V E S
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273	273	or health care practitioner; 176
274	274	(3) Advertise false or misleading information about it s 177
275	275	products or services; 178
276	276	(4) Refer a consumer to a specific attorney, law firm, or 179
277	277	health care practitioner, except that, if a consumer lacks legal 180
278	278	representation, the litigation financier may refer the consumer 181
279	279	to an attorney referral service operated by a county or state 182
280	280	bar association; 183
281	281	(5) Fail to promptly supply a copy of any complete 184
282	282	litigation financing contract to the consumer; 185
283	283	(6) Attempt to obtain a waiver of any remedy, including, 186
284	284	but not limited to, compensatory, statutory, or punitive 187
285	285	damages, that the consumer might otherwise have in the subject 188
286	286	civil action or claim; 189
287	287	(7) Attempt to effect arbitration or waiver of a 190
288	288	consumer's right to a jury trial in the subject civil action or 191
289	289	claim; 192
290	290	(8) Offer or provide legal advice to the consumer 193
291	291	regarding the litigation financing contract or the subject civil 194
292	292	action or claim; 195
293	293	(9) Assign a litigation financing contract in whole or in 196
294	294	part; or 197
295	295	(10) Direct, or make any decisions with respect to, the 198
296	296	course of the subject civil action or claim or any settlement 199
297	297	thereof. 200
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306	306	F L O R I D A H O U S E O F R E P R E S E N T A T I V E S
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310	310	Section 6. Section 501.1005, Florida Statutes, is created 201
311	311	to read: 202
312	312	501.1005 Required disclosures. — 203
313	313	(1) A litigation financing contract must contain the 204
314	314	following disclosures on the front page of the contract in at 205
315	315	least 12-point boldfaced type: 206
316	316	(a) Notice of the consumer's right to a completely filled 207
317	317	in contract; 208
318	318	(b) A statement that the litigation financier does not 209
319	319	have the right to, and may not make any decisions or attempt to, 210
320	320	influence the consumer or his or her att orney about the conduct 211
321	321	of the civil action or claim that is the subject of the contract 212
322	322	and that the right to make such decisions remains solely with 213
323	323	the consumer; 214
324	324	(c) The total funded amount provided to the consumer; 215
325	325	(d) An itemized list of all fees and charges payable by 216
326	326	the consumer; 217
327	327	(e) The interest rate; 218
328	328	(f) The total amount due from the consumer in 6 -month 219
329	329	intervals for 3 years, including all interest, fees, and 220
330	330	charges; 221
331	331	(g) A statement that the consumer will owe no fees or 222
332	332	charges other than those described in the disclosures; and 223
333	333	(h) The cumulative amount due from the consumer for all 224
334	334	litigation financing contracts if the consumer seeks multiple 225
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343	343	F L O R I D A H O U S E O F R E P R E S E N T A T I V E S
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347	347	contracts and makes repayment any time after contract execution. 226
348	348	(2) A litigation financing contract must also contain the 227
349	349	following disclosure on the front page of the contract in at 228
350	350	least 18-point uppercase and boldfaced type: 229
351	351	230
352	352	CONSUMER'S RIGHT TO CANCELLATION: YOU MAY CANCEL THIS 231
353	353	CONTRACT WITHOUT PENALTY, INTEREST, FEES, CHARGES, OR 232
354	354	FURTHER OBLIGATION WITHIN 5 BUSINESS DAYS FROM THE 233
355	355	DATE OF CONTRACT EXECUTION OR RECEIPT OF FUNDS FROM 234
356	356	[(INSERT NAME OF THE LITIGATION FINANCIER] , WHICHEVER 235
357	357	IS LATER, BY GIVING WRITTEN NOTICE OF THE CANCELLATION 236
358	358	AND BY RETURNING THE FUNDS TO [(INSERT NAME OF THE 237
359	359	LITIGATION FINANCIER] . FOR PURPOSES OF THE DEADLINE, 238
360	360	THE POSTMARK DATE ON FUNDS RETURNED BY REGULAR U.S. 239
361	361	MAIL, OR THE DATE OF THE RETURN RECE IPT REQUESTED IF 240
362	362	MAILED BY CERTIFIED MAIL, WILL BE CONSIDERED THE DATE 241
363	363	OF RETURN OF THE FUNDS. 242
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365	365	(3) A litigation financing contract must contain the 244
366	366	following disclosure immediately above the consumer's signature 245
367	367	line in 18-point uppercase and boldfaced type: 246
368	368	247
369	369	DO NOT SIGN THIS CONTRACT BEFORE READING IT COMPLETELY 248
370	370	OR IF THE CONTRACT CONTAINS ANY INCOMPLETE OR BLANK 249
371	371	SECTIONS. BEFORE YOU SIGN THIS CONTRACT, YOU SHOULD 250
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380	380	F L O R I D A H O U S E O F R E P R E S E N T A T I V E S
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384	384	CONSULT AN ATTORNEY. YOU MAY ALSO WANT TO CONSULT A 251
385	385	TAX ADVISOR, A FINANCIAL PROFESSIONAL, OR AN 252
386	386	ACCOUNTANT. 253
387	387	Section 7. Section 501.1006, Florida Statutes, is created 254
388	388	to read: 255
389	389	501.1006 Interest, fees, charges, and penalties. — 256
390	390	(1) A litigation financier may not directly or indirectly 257
391	391	charge, contract for, or receive an interest rate of g reater 258
392	392	than 25 percent of the funded amount per annum. In determining 259
393	393	compliance with the statutory maximum interest rate, the 260
394	394	computations used must be simple interest and not add -on 261
395	395	interest or any other computations. 262
396	396	(2) The maximum interest rate that may be contracted for 263
397	397	and received by a litigation financier is 12 times the maximum 264
398	398	monthly rate, and the maximum monthly rate must be computed on 265
399	399	the basis of one-twelfth of the annual rate for each full month. 266
400	400	The maximum daily rate must be computed on the basis of the 267
401	401	maximum monthly rate divided by the number of days in the month. 268
402	402	(3) Interest may only accrue until a court enters a final 269
403	403	order or a settlement agreement is executed in the civil action 270
404	404	or claim that is the subject of the litigation fi nancing 271
405	405	contract, whichever is earlier, but interest may not accrue for 272
406	406	a period exceeding 3 years after the date the consumer receives 273
407	407	the funds from the litigation financier. The total interest 274
408	408	assessed must be calculated based on the actual number of da ys 275
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417	417	F L O R I D A H O U S E O F R E P R E S E N T A T I V E S
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421	421	for which interest accrued. 276
422	422	Section 8. Section 501.1007, Florida Statutes, is created 277
423	423	to read: 278
424	424	501.1007 Effect of communication on privilege. —279
425	425	Communication between a consumer's attorney and a litigation 280
426	426	financier regarding a litigation financing c ontract does not 281
427	427	limit, waive, or abrogate the scope or nature of any statutory 282
428	428	or common-law privilege, including the work -product doctrine and 283
429	429	the attorney-client privilege. 284
430	430	Section 9. Section 501.1008, Florida Statutes, is created 285
431	431	to read: 286
432	432	501.1008 Violation; enforcement. — 287
433	433	(1) A violation of this part is an unfair and deceptive 288
434	434	trade practice actionable under part II of this chapter. 289
435	435	(2) This section does not limit the: 290
436	436	(a) Enforcing authority's exercise of powers or 291
437	437	performance of duties whi ch the enforcing authority is otherwise 292
438	438	legally authorized or required to exercise or perform; or 293
439	439	(b) Rights and remedies available to the state or a person 294
440	440	under any other law. 295
441	441	Section 10. This act shall take effect July 1, 2023. 296