Iowa Senate Bill SF54

Iowa 2025-2026 Regular Session

• Introduced: 1/16/25
• Refer: 1/16/25

Caption

A bill for an act regulating litigation financing contracts, and including effective date and applicability provisions.(See SF 586.)

Impact

The proposed legislation will alter how litigation financing operates by increasing transparency and accountability in the financing process. By requiring litigators to register and adhere to mandated practices, the bill aims to protect consumers from potential exploitation by litigation financers. It provides consumers assurance regarding the terms of the financing agreements, enabling them to make better-informed decisions regarding their legal funding options. Furthermore, this law aims to foster fair practices in the litigation financing industry, leading to a more balanced approach to the attorney-client relationship.

Summary

Senate File 54, entitled the Litigation Financing Transparency and Consumer Protection Act, seeks to regulate litigation financing agreements within the state. The bill mandates the registration of litigation financers with the secretary of state and establishes strict guidelines governing the terms and conditions of these financing contracts. It outlines required disclosures in contracts, restricts interest rates, and prevents litigation financers from having a financial interest in goods or services provided to consumers. Additionally, the bill ensures that any amended terms to contracts must be disclosed to all involved parties and received their written consent before becoming valid.

Contention

Notable points of contention surrounding SF54 include the potential impact on access to justice for individuals seeking legal recourse. Critics argue that stringent regulations may deter investment into litigation financing, thereby limiting options for consumers who rely on such funding to pursue claims. Proponents, however, contend that the increased transparency and protection are necessary to eliminate abusive practices historically associated with litigation financing. The effectiveness of the law will largely depend on its implementation and how stakeholders in the legal field adapt to the new regulatory environment.