Texas House Bill HB1254

Texas 2013 - 83rd Regular

Caption

Relating to transactions involving the assignment of rights in an individual's legal claim; authorizing the imposition of a fee.

Impact

With the implementation of HB 1254, state laws concerning contracts in civil justice funding will undergo significant changes. The bill requires funding companies to register with the Texas Department of Licensing and Regulation, instituting a regulatory framework aimed at curtailing any exploitative practices. The legislation mandates clear and conspicuous disclosures about the terms and fees associated with funding contracts, ensuring that consumers are adequately informed before their engagement with funding companies. By establishing these guidelines, the bill aims to protect consumers from potential predatory practices prevalent in the civil justice funding market.

Summary

House Bill 1254, known as the Civil Justice Funding Act, seeks to regulate the transactions involving the assignment of rights in an individual's legal claim, primarily focusing on civil justice funding. This bill introduces definitions and provisions regulating civil justice funding companies, allowing consumers to assign contingent rights to their legal claim proceeds. The act distinguishes civil justice funding transactions from loans, ensuring that they are not treated under existing loan regulations, which aims to provide clarity and protection for consumers entering these agreements. The intent is to foster a transparent environment for individuals seeking funding while they await the resolution of their legal claims.

Sentiment

Public sentiment surrounding HB 1254 appears to be generally supportive among consumer protection advocates, who argue that the regulations established by the bill are necessary to shield individuals from undue financial burdens during their pursuit of justice. Conversely, some civil justice funding companies express concern that the additional regulatory measures may hinder operations and limit financial options available to consumers. This tension highlights the balancing act of enhancing consumer protections while ensuring the viability of funding options within the legal market.

Contention

Notable points of contention include the classification of civil justice funding transactions as non-recourse in nature, meaning that if a consumer does not receive proceeds from their legal claim, they are not obligated to repay the funding amount. While this provision is seen as protective for consumers, some industry stakeholders argue this could result in increased costs for consumers as funding companies account for the higher risk. Additionally, the bill's strict regulations on attorney-interactions during funding contracts have raised concerns about the potential for reduced access to funding for individuals who may require fast financial assistance.