Iowa Senate Bill SSB3150

Iowa 2023-2024 Regular Session

• Introduced: 2/5/24
• Refer: 2/5/24

Caption

A bill for an act regulating litigation financing contracts, and including effective date and applicability provisions.

Impact

The implications of SSB3150 on state law are substantial as it places significant restrictions on how litigation financers may conduct business. Specifically, it prohibits various practices that can compromise consumer rights, including charging excessive interest rates beyond those established in existing financial codes, and receiving improper financial incentives for referring consumers. Moreover, litigation financers’ contracts may become unenforceable if they violate the proposed regulations, which strengthens consumer protections against unregulated financial practices in civil legal actions. This could foster a more trustworthy environment for individuals seeking legal redress but who may require financial assistance.

Summary

Senate Study Bill 3150, also known as the Litigation Financing Transparency and Consumer Protection Act, aims to regulate the practice of litigation financing within the state of Iowa. The bill establishes a comprehensive framework mandating registration with the Secretary of State for any entity engaging in litigation financing. By requiring public registration, the bill seeks to enhance transparency around litigation financers and their operations, ensuring that consumers have access to necessary information regarding financing agreements. It introduces strict requirements for disclosure pertaining to the terms and conditions of litigation financing contracts, aiming to safeguard consumers from potentially exploitative practices.

Contention

Notable points of contention surrounding SSB3150 may arise from potential pushback from litigation financiers who argue that stringent regulations could hinder access to necessary funds for consumers in need. Critics may also express concerns that the bill's regulatory burden may inadvertently limit the availability of financing options for those pursuing legal claims, particularly in class actions. Additionally, there could be debates over how the bill might affect legal representatives regarding their engagement with litigation financers, especially concerning fiduciary responsibilities and the nature of their financial relationships.