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2023 Regular Session
SENATE BILL NO. 196
BY SENATOR PEACOCK
Prefiled pursuant to Article III, Section 2(A)(4)(b)(i) of the Constitution of Louisiana.
CONTRACTS. Creates the Litigation Financing Disclosure and Security Protection Act.
(8/1/23)
1 AN ACT
2 To enact Chapter 2-C of Title 12 of the Louisiana Revised Statutes of 1950, to be comprised
3 of R.S. 9:3580.1 through R.S. 9:3580.6, relative to litigation disclosure; to provide
4 relative to financial disclosure; to provide relative to the creation of the Litigation
5 Financing Disclosure and Security Protection Act; to provide for definitions, terms,
6 and conditions; to provide for discovery; to provide for contract disclosures; to
7 provide with respect to class action lawsuits; to provide for solidary liability; to
8 provide for violations and contracts; and to provide for related matters.
9 Be it enacted by the Legislature of Louisiana:
10 Section 1. Chapter 2-C of Title 12 of the Louisiana Revised Statutes of 1950,
11 comprised of R.S. 9:3580.1 through R.S. 9:3580.6, is hereby enacted to read as follows:
12 CHAPTER 2-C. LITIGATION FINANCING
13 DISCLOSURE AND SECURITY P ROTECTION
14 §3580.1. Short title
15 This Chapter shall be known and may be cited as the "Litigation
16 Financing Disclosure and Security Protection Act".
17 Purpose. The purpose of this Act is to maintain integrity and establish
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1 transparency in our civil justice system. The use of third party litigation
2 funding in lawsuits is becoming more prevalent in our judicial system. The
3 United States maintains one of the largest third party litigation funding markets
4 in the world. Investments are being made by foreign hedge funds, private equity
5 funds, and in some cases, sovereign wealth funds connected to hostile
6 governments. These nonparty participants have an impact on the speed and
7 manner of resolution of a lawsuit. The entrance of both foreign and domestic
8 actors in third party litigation funding has the potential to encourage frivolous
9 lawsuits, prolong settlement efforts, and harm the sanctity of the client-attorney
10 relationship, all with the intended goal of overwhelming our courts, weakening
11 critical industries, and draining the resources of both private and corporate
12 citizens. The use of third party litigation financing by agents of hostile
13 governments can threaten the integrity of our national security by providing
14 access to technological competitive information, trade secrets, and other
15 confidential information.
16 To guard against these threats, while maintaining legitimate access to
17 third party litigation funding, it is imperative that parties seeking to avail
18 themselves of third party litigation funding disclosures, pursuant to the
19 requirements of this Act, when such financing is used to support litigation.
20 §3580.2. Definitions
21 For the purpose of this Chapter, the following terms have the meanings
22 ascribed to them in this Section, unless a different meaning clearly appears
23 from the context:
24 (1) "Legal representative" means an attorney, group of attorneys, or law
25 firm who may be entitled to represent a person or persons in a legal dispute in
26 this state.
27 (2) "Litigation financer" means a person, group of persons, or legal
28 entity, engaged in the business of litigation financing or any other economic
29 activity intended to facilitate litigation financing.
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1 (3) "Litigation financing" means the financing, funding, advancing, or
2 loaning of money to pay for fees, costs, expenses, or has agreed to pay expenses
3 directly related to the prosecuting the legal claim, administrative proceeding,
4 claim, or cause of action, if the financing, funding, advancing, or loaning of
5 money is provided by any person other than a person who is:
6 (a) a party to the civil action, administrative proceeding, claim, or cause
7 of action;
8 (b) a legal representative engaged, directly or indirectly through another
9 legal representative, to represent a party in the civil action, administrative
10 proceeding, claim, or cause of action; or
11 (c) an entity or insurer with a preexisting contractual obligation to
12 indemnify or defend a party to the civil action, administrative proceeding,
13 claim, or cause of action. Funds provided directly to a party solely for personal
14 needs shall not be considered litigation financing provided such funds are
15 provided exclusively for personal and family use and not for legal filings, legal
16 document preparation and drafting, appeals, creation of a litigation strategy,
17 drafting testimony, and related litigation expenses.
18 (4) "Litigation financing contract or agreement" means a transaction in
19 which litigation financing is provided to a party or legal representative in return
20 for assigning to the litigation financer a contingent right to receive an amount
21 including payment of interest, fees or any other consideration for the financing
22 provided out of the proceeds of any realized judgment, award, settlement, or
23 verdict the party may receive on the underlying claim or action. The term
24 "litigation financing contract or agreement" does not include:
25 (a) Legal representation services provided to a party by a legal
26 representative on a contingency fee basis, or legal costs advanced by a legal
27 representative when such services or costs are provided to or on behalf of a
28 party by a legal representative in the dispute and in accordance with the
29 Louisiana Rules of Professional Conduct.
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1 (b) The bills, receivables, or liens held by a medical provider or their
2 assignee.
3 (c) Secured or unsecured loans made directly to a party or legal
4 representative when repayment of the loan is not contingent upon the judgment,
5 award, settlement, or verdict in a claim or action.
6 (5) "National security" interests are those interests that encompass the
7 national defense, foreign intelligence and counterintelligence, international and
8 internal security, and foreign relations.
9 (6) "Party" means any person or entity residing or domiciled in this state
10 or any legal representative of such person or entity.
11 (7) "Proprietary information" shall mean information developed,
12 created, or discovered by an entity, or which became known by, or was
13 conveyed to said entity, which has commercial value in the entity's business.
14 "Proprietary information" shall include, but not be limited to, domain names,
15 trade secrets, copyrights, ideas, techniques, inventions whether patentable or
16 not, and any other information of any type relating to designs, configurations,
17 documentation, recorded data, schematics, circuits, mask works, layouts, source
18 code, object code, master works, master databases, algorithms, flow charts,
19 formulae, works of authorship, mechanisms, research, manufacture,
20 improvements, assembly, installation, intellectual property including patents
21 and patent applications, and the information concerning the entity's actual or
22 anticipated business, research or development, or which is received in
23 confidence by or for the entity from any other person.
24 §3580.3. Disclosure of financing agreements; discovery
25 A. Except as otherwise stipulated by the parties or ordered by the court,
26 a party or his legal representative shall, without awaiting a discovery request
27 and no later than sixty days after the entry of such agreement, provide to all
28 parties to the litigation, including their insurer if prior to litigation, any
29 litigation financing contract or agreement under which anyone, other than a
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1 legal representative permitted to charge a contingent fee representing a party,
2 has received or has a right to receive compensation or proceeds that are
3 contingent on and sourced from any proceeds of the civil action, by settlement,
4 judgment, or otherwise.
5 B. Except as otherwise stipulated by the parties or ordered by the court,
6 a party or his legal representative shall, without awaiting a discovery request
7 and no later than sixty days after the entry of such agreement, provide to all
8 parties to the litigation, including their insurer if prior to litigation, any
9 litigation financing contract or other agreement, under which anyone other than
10 the party's legal representative permitted to charge a contingent fee
11 representing a party, has received or is entitled to receive, proprietary
12 information or information affecting national defense or security, obtained as
13 a result of the litigation.
14 C. The existence of litigation financing, litigation financing contract or
15 agreement, and all participants in such financing arrangements are permissible
16 subjects of discovery in all civil cases, including personal injury litigation or
17 matters arising out of personal injuries.
18 §3580.4. Class action lawsuits
19 This Chapter shall apply to any action filed or certified as a class action.
20 In addition to the disclosure requirements set forth in R.S. 9:3580.3, the legal
21 representative of the putative class shall disclose to all parties, putative class
22 members, and the court, any legal, financial, or other relationship between the
23 legal representative and the litigation financer.
24 §3580.5. Solidary liability
25 A litigation financer is solidarily liable for costs assessed by the court
26 relative to the payment of any monetary sanction imposed pursuant to the
27 Louisiana Code of Civil Procedure on the party whose claim or action the
28 litigation financer is funding pursuant to a litigation financing transaction.
29 §3580.6. Violation; unenforceable contract
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1 Any violation of this Chapter shall make the litigation financing contract
2 unenforceable by the litigation financer, the party, or any successor-in-interest
3 to the litigation financing contract.
The original instrument was prepared by Lebra Bias. The following digest,
which does not constitute a part of the legislative instrument, was prepared
by Nicholas Davison.
DIGEST
SB 196 Engrossed 2023 Regular Session Peacock
Proposed law creates the Litigation Financing Disclosure and Security Protection Act.
Proposed law provides for definitions of "legal representative", "litigation financer",
"litigation financing", "litigation financing contract or agreement", "national security",
"party", and "proprietary information".
Proposed law provides that except as otherwise stipulated by the parties or ordered by the
court, a party or his legal representative shall provide to all litigants, including the insurer
if prior to litigation, any litigation financing contract or agreement under which anyone,
other than a legal representative permitted to charge a contingent fee, has received or has a
right to receive compensation or proceeds that are contingent on and sourced from any
proceeds of the civil action by settlement, judgement, or otherwise.
Proposed law provides that except as otherwise stipulated by the parties or ordered by the
court, a party or his legal representative shall provide to all litigants, including the insurer
if prior to litigation, any litigation financing contract or agreement under which anyone,
other than a legal representative permitted to charge a contingent fee, has received or has a
right to receive proprietary information or information affecting national defense or security
obtained as a result of the litigation.
Proposed law provides that the existence of litigation financing, litigation financing contracts
or agreements, and all participants in such financing arrangements are permissible subjects
of discovery in all civil cases, including personal injury litigation or matters arising out of
personal injuries.
Proposed law relative to class action suits, provides that in addition to the disclosure
requirements set forth in proposed law, the legal representative of the putative class shall
disclose to all parties, putative class members, and the court, any legal, financial, or other
relationship between the legal representative and litigation financer.
Proposed law provides that the litigation financer is solidarily liable for costs assessed by
the court relative to the payment of any monetary sanction that is imposed pursuant to
present law, on the party whose claim or action is being funded pursuant to a litigation
financing contract or agreement.
Proposed law provides that any violation of proposed law shall make the litigation financing
contract unenforceable by the litigation financer, the consumer, or any successor-in-interest
to the litigation financing contract.
Effective August 1, 2023.
(Adds R.S. 9:3580.1-3580.6)
Summary of Amendments Adopted by Senate
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Committee Amendments Proposed by Senate Committee on Judiciary A to the
original bill
1. Clarifies the definition of "litigation financing".
2. Changes the term "litigation financing transaction" to "litigation financing
contract or agreement".
3. Clarifies the definition of "litigation financing contract or agreement".
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