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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
A bill to be entitled 1
An act relating to litigation financing consumer 2
protection; creating part VIII of ch. 501, F.S., 3
entitled "Litigation Financing Consumer Protection 4
Act"; creating s. 501.1001, F.S.; providing 5
definitions; creating s. 501.1002, F.S.; requiring 6
litigation financiers to register with the Department 7
of State before engaging in litigation financing; 8
providing registration requirements; requiring 9
litigation financiers to file a surety bond meeting 10
specified requirements; requiring the department serve 11
notice to such financiers and to revoke such 12
registrations for certain noncompliance; authorizing 13
the department to adopt rules; creating s. 501.1003, 14
F.S.; providing requirements for litigation financing 15
contracts; creating s. 501.1004, F.S.; prohibiting 16
litigation financiers from engaging in specified 17
conduct; creating s. 501.1005, F.S.; providing 18
disclosure requirements for litigation financing 19
contracts; creating s. 501.1006, F.S.; authorizing 20
litigation financiers to assess specified interest, 21
fees, and charges; providing requirements for such 22
interest, fees, and charges; prohibiting a litigation 23
financier from assessing specified fees or charges; 24
creating s. 501.1007, F.S.; providing that specified 25
HB 1447 2023
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communications between attorneys and litigation 26
financiers do not effect statutory or common -law 27
privilege; creating s. 501.1008, F.S.; providing that 28
violations of the act are deceptive and unfair trade 29
practices; providing construction; providing an 30
effective date. 31
32
Be It Enacted by the Legislature of the State o f Florida: 33
34
Section 1. Part VIII of chapter 501, Florida Statutes, 35
consisting of sections 501.1001, 501.1002, 501.1003, 501.1004, 36
501.1005, 501.1006, 501.1007, and 501.1008, Florida Statutes, is 37
created and entitled "Litigation Financing Consumer Prote ction 38
Act." 39
Section 2. Section 501.1001, Florida Statutes, is created 40
to read: 41
501.1001 Definitions. —As used in this part, the term: 42
(1) "Consumer" means any individual. 43
(2) "Department" means the Department of State. 44
(3) "Funded amount" means the funds actually received and 45
retained by a consumer under a litigation financing contract. 46
(4) "Health care practitioner" has the same meaning as in 47
s. 456.001. 48
(5) "Interest" means the cost of obtaining litigation 49
financing and includes any profit or advantage of any kind 50
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whatsoever that a litigation financier may charge, contract for, 51
collect, receive, or in any way obtain as a condition for a 52
litigation financing contract. Charges and fees specifically 53
authorized by this part are not interest. 54
(6) "Litigation financier" means a person engaged in the 55
business of litigation financing. 56
(7) "Litigation financing" means a nonrecourse transaction 57
in which a litigation financier provides funds to a consumer in 58
exchange for an assignment of the consume r's contingent right to 59
receive an amount of the potential net proceeds of the 60
consumer's civil action or claim. The term does not include: 61
(a) Legal services provided to a consumer on a contingency 62
fee basis, or advanced legal costs, where such services or costs 63
are provided by an attorney representing the consumer in 64
accordance with the Florida Rules of Professional Conduct; 65
(b) A commercial tort claim as defined in s. 66
679.1021(1)(m); 67
(c) A worker's compensation claim under chapter 440; 68
(d) Lending or financing arrangements between an attorney 69
or law firm and a lending institution to fund litigation costs 70
in the ordinary course of business; or 71
(e) A consumer finance loan, as defined in s. 516.01(2). 72
(8) "Net proceeds" means the portion of the proceeds of a 73
civil action or claim remaining after satisfaction of all liens 74
with a higher priority than that of the litigation financier as 75
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specified in s. 501.1006(2). 76
Section 3. Section 501.1002, Florida Statutes, is created 77
to read: 78
501.1002 Litigation financier registration; registration 79
revocation.— 80
(1) A litigation financier may not engage in litigation 81
financing in the state before registering as a litigation 82
financier under this section. 83
(a) A litigation financier that is a corporat ion, limited 84
liability company, or partnership is registered under this 85
section if it has: 86
1. Met the bond requirements of subsection (2); 87
2. A status of active and in good standing as reflected in 88
department records; and 89
3. Filed articles of organiz ation or incorporation, a 90
certificate of limited partnership, or another organizational 91
document, or, if a foreign entity, an application for a 92
certificate of authority with the department stating therein 93
that it is a litigation financier. 94
(b) A litigation financier who is not a corporation, 95
limited liability company, or partnership is registered under 96
this section if he or she has: 97
1. Met the bond requirements of subsection (2); and 98
2. Filed a litigation financier registration application 99
with the department on a form prescribed by the department 100
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containing, at a minimum: 101
a. The applicant's full legal name and fictitious name, if 102
any; 103
b. The applicant's physical address, mailing address, and 104
telephone number; 105
c. A statement that the applicant is a litigation 106
financier; and 107
d. Any other information the department deems necessary. 108
(2) A litigation financier must file with the department a 109
$250,000 surety bond, which bond must be: 110
(a) Issued by a surety company authorized to do business 111
in the state. 112
(b) Payable to the department for the payment of damages 113
awarded to a consumer under part II of this chapter. 114
(c) Effective so long as the department's records 115
designate the litigation financier as such or a litigation 116
financing contract with t he litigation financier is effective. 117
(3) A litigation financier must amend its registration 118
within 30 days after the date the information contained therein 119
changes or becomes inaccurate in any respect. A litigation 120
financier who is not a corporation, li mited liability company, 121
or partnership may amend his or her registration by filing with 122
the department an amendment on a form prescribed by the 123
department. 124
(4) If the department determines that a litigation 125
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financier has not complied with the requiremen ts of this 126
section, the department shall serve the litigation financier 127
notice in a record of its intent to revoke the registration of 128
the litigation financier. Such notice: 129
(a) Must specifically state all grounds for revocation; 130
and 131
(b) May be sent by electronic mail to a litigation 132
financier that provided the department with an electronic mail 133
address. 134
(5) A litigation financier has 60 days after the date the 135
department sends the notice under subsection (4) to correct the 136
grounds for revocation or d emonstrate to the reasonable 137
satisfaction of the department that each ground determined by 138
the department does not exist. The department shall revoke the 139
litigation financier registration of any litigation financier 140
who fails to comply with the requirement s of this section. 141
(6) The department has the authority reasonably necessary 142
to enable it to administer this section efficiently, to perform 143
duties imposed upon it, and to adopt rules to implement this 144
section. 145
Section 4. Section 501.1003, Florida St atutes, is created 146
to read: 147
501.1003 Litigation financing contracts; terms. —The 148
litigation financing terms must be set forth in a written 149
contract containing: 150
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(1) A right of rescission allowing the consumer to cancel 151
the contract without penalty, interest, fees, charges, or 152
further obligation if, within 5 business days after execution of 153
a contract or receipt of funds by the consumer, whichever is 154
later, the consumer provides written rescission notice and 155
returns any funds already provided under th e contract to the 156
litigation financier; 157
(2) The consumer's written acknowledgement of whether an 158
attorney represents him or her in the civil action or claim that 159
is the subject of the contract; and 160
(3) A statement indicating that, in the event the proc eeds 161
of the subject civil action or claim are paid into a settlement 162
fund or trust, the litigation financier must notify the fund or 163
trust administrator of any outstanding financial obligations 164
arising from the contract. 165
Section 5. Section 501.1004, Fl orida Statutes, is created 166
to read: 167
501.1004 Prohibited conduct. —A litigation financier may 168
not: 169
(1) Pay or offer to pay a commission, referral fee, or 170
other consideration to any person, including an attorney, law 171
firm, or health care practitioner, for referring a consumer to a 172
litigation financier; 173
(2) Accept a commission, referral fee, rebate, or other 174
consideration from any person, including an attorney, law firm, 175
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or health care practitioner; 176
(3) Advertise false or misleading information about it s 177
products or services; 178
(4) Refer a consumer to a specific attorney, law firm, or 179
health care practitioner, except that, if a consumer lacks legal 180
representation, the litigation financier may refer the consumer 181
to an attorney referral service operated by a county or state 182
bar association; 183
(5) Fail to promptly supply a copy of any complete 184
litigation financing contract to the consumer; 185
(6) Attempt to obtain a waiver of any remedy, including, 186
but not limited to, compensatory, statutory, or punitive 187
damages, that the consumer might otherwise have in the subject 188
civil action or claim; 189
(7) Attempt to effect arbitration or waiver of a 190
consumer's right to a jury trial in the subject civil action or 191
claim; 192
(8) Offer or provide legal advice to the consumer 193
regarding the litigation financing contract or the subject civil 194
action or claim; 195
(9) Assign a litigation financing contract in whole or in 196
part; or 197
(10) Direct, or make any decisions with respect to, the 198
course of the subject civil action or claim or any settlement 199
thereof. 200
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Section 6. Section 501.1005, Florida Statutes, is created 201
to read: 202
501.1005 Required disclosures. — 203
(1) A litigation financing contract must contain the 204
following disclosures on the front page of the contract in at 205
least 12-point boldfaced type: 206
(a) Notice of the consumer's right to a completely filled 207
in contract; 208
(b) A statement that the litigation financier does not 209
have the right to, and may not make any decisions or attempt to, 210
influence the consumer or his or her att orney about the conduct 211
of the civil action or claim that is the subject of the contract 212
and that the right to make such decisions remains solely with 213
the consumer; 214
(c) The total funded amount provided to the consumer; 215
(d) An itemized list of all fees and charges payable by 216
the consumer; 217
(e) The interest rate; 218
(f) The total amount due from the consumer in 6 -month 219
intervals for 3 years, including all interest, fees, and 220
charges; 221
(g) A statement that the consumer will owe no fees or 222
charges other than those described in the disclosures; and 223
(h) The cumulative amount due from the consumer for all 224
litigation financing contracts if the consumer seeks multiple 225
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contracts and makes repayment any time after contract execution. 226
(2) A litigation financing contract must also contain the 227
following disclosure on the front page of the contract in at 228
least 18-point uppercase and boldfaced type: 229
230
CONSUMER'S RIGHT TO CANCELLATION: YOU MAY CANCEL THIS 231
CONTRACT WITHOUT PENALTY, INTEREST, FEES, CHARGES, OR 232
FURTHER OBLIGATION WITHIN 5 BUSINESS DAYS FROM THE 233
DATE OF CONTRACT EXECUTION OR RECEIPT OF FUNDS FROM 234
[(INSERT NAME OF THE LITIGATION FINANCIER] , WHICHEVER 235
IS LATER, BY GIVING WRITTEN NOTICE OF THE CANCELLATION 236
AND BY RETURNING THE FUNDS TO [(INSERT NAME OF THE 237
LITIGATION FINANCIER] . FOR PURPOSES OF THE DEADLINE, 238
THE POSTMARK DATE ON FUNDS RETURNED BY REGULAR U.S. 239
MAIL, OR THE DATE OF THE RETURN RECE IPT REQUESTED IF 240
MAILED BY CERTIFIED MAIL, WILL BE CONSIDERED THE DATE 241
OF RETURN OF THE FUNDS. 242
243
(3) A litigation financing contract must contain the 244
following disclosure immediately above the consumer's signature 245
line in 18-point uppercase and boldfaced type: 246
247
DO NOT SIGN THIS CONTRACT BEFORE READING IT COMPLETELY 248
OR IF THE CONTRACT CONTAINS ANY INCOMPLETE OR BLANK 249
SECTIONS. BEFORE YOU SIGN THIS CONTRACT, YOU SHOULD 250
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CONSULT AN ATTORNEY. YOU MAY ALSO WANT TO CONSULT A 251
TAX ADVISOR, A FINANCIAL PROFESSIONAL, OR AN 252
ACCOUNTANT. 253
Section 7. Section 501.1006, Florida Statutes, is created 254
to read: 255
501.1006 Interest, fees, charges, and penalties. — 256
(1) A litigation financier may not directly or indirectly 257
charge, contract for, or receive an interest rate of g reater 258
than 25 percent of the funded amount per annum. In determining 259
compliance with the statutory maximum interest rate, the 260
computations used must be simple interest and not add -on 261
interest or any other computations. 262
(2) The maximum interest rate that may be contracted for 263
and received by a litigation financier is 12 times the maximum 264
monthly rate, and the maximum monthly rate must be computed on 265
the basis of one-twelfth of the annual rate for each full month. 266
The maximum daily rate must be computed on the basis of the 267
maximum monthly rate divided by the number of days in the month. 268
(3) Interest may only accrue until a court enters a final 269
order or a settlement agreement is executed in the civil action 270
or claim that is the subject of the litigation fi nancing 271
contract, whichever is earlier, but interest may not accrue for 272
a period exceeding 3 years after the date the consumer receives 273
the funds from the litigation financier. The total interest 274
assessed must be calculated based on the actual number of da ys 275
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for which interest accrued. 276
Section 8. Section 501.1007, Florida Statutes, is created 277
to read: 278
501.1007 Effect of communication on privilege. —279
Communication between a consumer's attorney and a litigation 280
financier regarding a litigation financing c ontract does not 281
limit, waive, or abrogate the scope or nature of any statutory 282
or common-law privilege, including the work -product doctrine and 283
the attorney-client privilege. 284
Section 9. Section 501.1008, Florida Statutes, is created 285
to read: 286
501.1008 Violation; enforcement. — 287
(1) A violation of this part is an unfair and deceptive 288
trade practice actionable under part II of this chapter. 289
(2) This section does not limit the: 290
(a) Enforcing authority's exercise of powers or 291
performance of duties whi ch the enforcing authority is otherwise 292
legally authorized or required to exercise or perform; or 293
(b) Rights and remedies available to the state or a person 294
under any other law. 295
Section 10. This act shall take effect July 1, 2023. 296