Maryland 2025 Regular Session

Maryland House Bill HB1274 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1
2	2
3	3	EXPLANATION: CAPITALS INDICATE MATTER ADDE D TO EXISTING LAW .
4	4	[Brackets] indicate matter deleted from existing law.
5	5	hb1274
6	6
7	7	HOUSE BILL 1274
8	8	I3 5lr2806
9	9
10	10	By: Delegate A. Johnson
11	11	Introduced and read first time: February 7, 2025
12	12	Assigned to: Economic Matters
13	13
14	14	A BILL ENTITLED
15	15
16	16	AN ACT concerning 1
17	17
18	18	Consumer Protection – Third–Party Litigation Financing 2
19	19
20	20	FOR the purpose of prohibiting certain litigation financiers from engaging in certain 3
21	21	conduct with respect to litigation financing transactions and certain litigation 4
22	22	financing contracts; requiring that the litigation financing contracts contain certain 5
23	23	disclosures and be executed in a certain manner; requiring a certain disclosure of a 6
24	24	litigation financing contract in certain civil actions; imposing a fiduciary duty on 7
25	25	litigation financiers in certain class actions; requiring that a litigation financing 8
26	26	contract be rendered void and unenforceable under certain circumstances; providing 9
27	27	that a litigation financier may be subject to certain penalty and enforcement 10
28	28	mechanisms for usury; and generally relating to third–party litigation financing 11
29	29	transactions. 12
30	30
31	31	BY adding to 13
32	32	Article – Commercial Law 14
33	33	Section 14–5001 through 14–5010 to be under the new subtitle “Subtitle 50. 15
34	34	Maryland Transparency in Third–Party Litigation Financing Act” 16
35	35	Annotated Code of Maryland 17
36	36	(2013 Replacement Volume and 2024 Supplement) 18
37	37
38	38	SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 19
39	39	That the Laws of Maryland read as follows: 20
40	40
41	41	Article – Commercial Law 21
42	42
43	43	SUBTITLE 50. MARYLAND TRANSPARENCY IN THIRD–PARTY LITIGATION 22
44	44	FINANCING ACT. 23
45	45
46	46	14–5001. 24
47	47	2 HOUSE BILL 1274
48	48
49	49
50	50	(A) IN THIS SUBTITLE THE FOLLOWING WORDS HAVE THE MEANINGS 1
51	51	INDICATED. 2
52	52
53	53	(B) “CIVIL ACTION” INCLUDES ANY LEGAL CLAIM, CASE, ADMINISTRATIVE 3
54	54	PROCEEDING , OR PORTFOLIO OF ACTI ONS TO RECOVER DAMAG ES IN THE STATE. 4
55	55
56	56	(C) “CONSUMER” MEANS AN INDIVIDUAL WHO IS DOMICILED , RESIDES, OR 5
57	57	IS PRESENT IN TH E STATE OR WHO IS OR MA Y BECOME A PLAINTIFF , CLAIMANT, OR 6
58	58	COMPLAINANT IN A CIVIL ACTION IN THE STATE. 7
59	59
60	60	(D) “LEGAL REPRESENTATIVE ” MEANS AN ATTORNEY , A GROUP OF 8
61	61	ATTORNEYS, OR A LAW FIRM LICENSED AN D AUTHORIZED TO PRAC TICE LAW AND 9
62	62	REPRESENT A CONSUMER IN A CIVIL ACTION IN THE STATE. 10
63	63
64	64	(E) “LITIGATION FINANCIER ” MEANS A PERSON OR GROUP OF PERSONS 11
65	65	ENGAGED IN OR FORMED , CREATED, OR ESTABLISHED FOR T HE PURPOSE OF 12
66	66	ENGAGING IN THE BUSI NESS OF LITIGATION F INANCING OR ANY OTHE R BUSINESS 13
67	67	OR ECONOMIC ACTIVITY IN WHICH A PERSON OR GROUP OF PERSONS REC EIVES 14
68	68	CONSIDERATION OF ANY KIND IN EXCHANGE FOR PROVIDING LITIGATION 15
69	69	FINANCING. 16
70	70
71	71	(F) “LITIGATION FINANCING ” MEANS THE FINANCING , FUNDING, 17
72	72	ADVANCING, OR LOANING OF MONEY TO A CONSUMER OR A CONSUMER ’S LEGAL 18
73	73	REPRESENTATIVE IF : 19
74	74
75	75	(1) THE REPAYMENT OF ALL OR ANY PORTION OF TH E AMOUNT 20
76	76	FINANCED, FUNDED, ADVANCED, OR LOANED IS: 21
77	77
78	78	(I) CONTINGENT ON THE OUT COME OF A CIVIL ACTION; OR 22
79	79
80	80	(II) REQUIRED ONLY IF THE CONSUMER PREVAILS IN A CIVIL 23
81	81	ACTION; OR 24
82	82
83	83	(2) THE MONEY OR FUNDS FO R THE REPAYMENT OF A NY AMOUNT OF 25
84	84	FINANCING, FUNDING, ADVANCE, OR LOAN IS DERIVED O R SOURCED, DIRECTLY OR 26
85	85	INDIRECTLY, FROM THE PROCEEDS OR OTHER CONSIDERATION REALIZ ED FROM 27
86	86	ANY JUDGMENT , AWARD, SETTLEMENT , VERDICT, OR OTHER FORM OF MON ETARY 28
87	87	RELIEF THE CONSUMER MAY RECEIVE OR RECOV ER IN RELATION TO A CIVIL 29
88	88	ACTION. 30
89	89
90	90	(G) (1) “LITIGATION FINANCING CONTRACT” MEANS A WRITTEN 31
91	91	CONTRACT IN WHICH A LITIGATION FINANCIER AGREES TO PROVIDE LI TIGATION 32 HOUSE BILL 1274 3
92	92
93	93
94	94	FINANCING TO A CONSUMER IN CONJUNCTION WITH A CIVIL ACTION AS 1
95	95	CONSIDERATION FOR : 2
96	96
97	97	(I) REPAYMENT OF THE LITI GATION FINANCING; 3
98	98
99	99	(II) THE PAYMENT OF INTERE ST, FEES, OR OTHER 4
100	100	CONSIDERATION TO THE LITIGATION FINANCIER ; OR 5
101	101
102	102	(III) ASSIGNING TO THE LITIGATION FINANCIER A RIGHT TO 6
103	103	RECEIVE PAYMENT FROM THE VALUE OF: 7
104	104
105	105	1. ANY PROCEEDS OR OTHER CONSIDERATION 8
106	106	REALIZED FROM ANY JU DGMENT, AWARD, SETTLEMENT , OR VERDICT; OR 9
107	107
108	108	2. ANY OTHER FORM OF MONETAR Y RELIEF A 10
109	109	CONSUMER , A LEGAL REPRESENTATIVE , OR ANY OTHER PERSON MAY REC EIVE OR 11
110	110	RECOVER IN RELATION TO THE CIVIL ACTION. 12
111	111
112	112	(2) “LITIGATION FINANCING CONTRACT” DOES NOT INCLUDE AN 13
113	113	AGREEMENT , A CONTRACT, OR AN ENGAGEMENT OF A LEGA L REPRESENTATIVE TO 14
114	114	RENDER LEGAL SERVICE S TO A CONSUMER ON A CONTIN GENCY FEE BASIS , 15
115	115	INCLUDING THE ADVANC EMENT OF LEGAL COSTS BY THE LEGAL REPRESE NTATIVE 16
116	116	IN WHICH THE SERVICE S OR COSTS ARE PROVI DED TO OR ON BEHALF OF A 17
117	117	CONSUMER BY THE LEGA L REPRESENTATIVE WHO IS REPRESENT ING THE 18
118	118	CONSUMER IN A CIVIL ACTION. 19
119	119
120	120	(H) “PORTFOLIO OF ACTIONS ” MEANS AN ARRANGEMENT IN WHICH 20
121	121	LITIGATION FINANCIER S FINANCE MULTIPLE CIVIL ACTIONS BELONGING TO AN 21
122	122	ATTORNEY OR A LAW FIRM WITH ANY RETURN ON INVESTED C APITAL COMING FROM 22
123	123	THE SETTLEMENT OR JU DGMENT OF ANY INDIVI DUAL CIVIL ACTION OR GROUP OF 23
124	124	CIVIL ACTIONS. 24
125	125
126	126	14–5002. 25
127	127
128	128	IT IS THE INTENT OF T HE GENERAL ASSEMBLY TO PROMOTE CONSUMER 26
129	129	PROTECTION AND TRANSPARENCY IN THIRD–PARTY LITIGATION FIN ANCING 27
130	130	TRANSACTIONS THROUGH THE REGULATION AND DISCLOSURE REQUIREMENTS 28
131	131	PROVIDED UNDER THIS SUBTITLE. 29
132	132
133	133	14–5003. 30
134	134
135	135	THIS SUBTITLE DOES NO T APPLY TO: 31
136	136	4 HOUSE BILL 1274
137	137
138	138
139	139	(1) A NONPROFIT ORGANIZATI ON THAT PROVIDES LIT IGATION 1
140	140	FINANCING, DIRECTLY OR INDIRECT LY, FOR THE BENEFIT OF T HE NONPROFIT 2
141	141	ORGANIZATION OR ONE OR MORE OF ITS MEMBE RS WITHOUT RECEIVING AS 3
142	142	CONSIDERATION FOR TH E LITIGATION FINANCI NG: 4
143	143
144	144	(I) THE PAYMENT OF INTERE ST, FEES, OR OTHER 5
145	145	CONSIDERATION ; OR 6
146	146
147	147	(II) EXCEPT FOR IN –HOUSE COUNSEL OF THE NONPROFIT 7
148	148	ORGANIZATION , ANY RIGHT TO RECOVER Y OR PAYMENT FROM TH E AMOUNT OF ANY 8
149	149	JUDGMENT, AWARD, SETTLEMENT , VERDICT, OR OTHER FORM OF MON ETARY 9
150	150	RELIEF OBTAINED IN T HE CIVIL ACTION; 10
151	151
152	152	(2) LITIGATION FINANCING PROVIDED BY A PERSON ENGAGED IN 11
153	153	COMMERCE OR BUSINESS ACTIVITY, BUT ONLY IF THE PERS ON DOES NOT: 12
154	154
155	155	(I) CHARGE OR COLLECT ANY INTEREST, FEES, OR OTHER 13
156	156	CONSIDERATION ; 14
157	157
158	158	(II) RETAIN OR RECEIVE ANY FINANCIAL INTEREST I N THE 15
159	159	OUTCOME OF A CIVIL A CTION; OR 16
160	160
161	161	(III) RECEIVE ANY RIGHT TO RECOVERY OR PAYMENT FROM THE 17
162	162	AMOUNT OF ANY JUDGME NT, AWARD, SETTLEMENT , VERDICT, OR OTHER FORM OF 18
163	163	MONETARY R ELIEF OBTAINED IN A CIVIL ACTION; OR 19
164	164
165	165	(3) A BANKING INSTITUTION , AS DEFINED IN § 1–101 OF THE 20
166	166	FINANCIAL INSTITUTIONS ARTICLE, THAT DOES NOT RECEIV E AS CONSIDERATION 21
167	167	FOR LOANING MONEY TO A BORROWER A RIGHT T O RECEIVE PAYMENT FR OM THE 22
168	168	VALUE OF ANY PROCEED S OR OTHER CONSIDERATI ON REALIZED FROM ANY 23
169	169	JUDGMENT, AWARD, SETTLEMENT , VERDICT, OR OTHER FORM OF MON ETARY 24
170	170	RELIEF THE BORROWER MAY RECEIVE OR RECOV ER IN RELATION TO A CIVIL 25
171	171	ACTION. 26
172	172
173	173	14–5004. 27
174	174
175	175	(A) BEFORE A LITIGATION F INANCING CONTRACT MA Y BE SIGNED BY A 28
176	176	PARTY TO THE CONTRACT , THE TERMS AND CONDITI ONS OF THE LITIGATION 29
177	177	FINANCING CONTRACT SHALL BE RECORDED IN WRITING AND INCLUDE EACH TERM 30
178	178	AND CONDITION INTEND ED BY THE PARTIES WITHOUT OMISSION OF ANY INTENDED 31
179	179	TERM OR CONDITION . 32
180	180	HOUSE BILL 1274 5
181	181
182	182
183	183	(B) A LITIGATION FINANCIER MAY NOT AMEND THE TE RMS OR CONDITIONS 1
184	184	OF AN EXECUTED LITIGATION FINANCING CONTRACT WITHOUT FUL L DISCLOSURE 2
185	185	TO, AND PRIOR WRITTEN CONSENT OF , EACH PARTY TO THE LITIGATION FI NANCING 3
186	186	CONTRACT. 4
187	187
188	188	14–5005. 5
189	189
190	190	(A) (1) A LITIGATION FINANCING CONTRACT SHALL CONTAIN THE 6
191	191	DISCLOSURES AND STATEMENTS REQUIRED UNDER THIS SECTION. 7
192	192
193	193	(2) THE DISCLOSURES REQUI RED UNDER THIS SECTI ON SHALL 8
194	194	CONSTITUTE THE MATER IAL TERMS OF A LITIGATION FINANCING CONTRACT. 9
195	195
196	196	(B) UNLESS OTHERWISE SPEC IFIED, THE DISCLOSURES AND STATEMENTS 10
197	197	REQUIRED UNDER THIS SECTION SHALL BE TYPED IN AT LEAST 14 POINT, BOLD 11
198	198	FONT AND BE PLACED C LEARLY AND CONSPICUOUSLY WITHIN THE LITIGATION 12
199	199	FINANCING CONTRACT . 13
200	200
201	201	(C) A LITIGATION FINANCING CONTRACT SHALL DISCLOSE: 14
202	202
203	203	(1) ON THE FIRST PAGE OF THE LITIGATION FINAN CING CONTRACT , 15
204	204	THE NAME, STREET ADDRESS, AND MAILING ADDRESS OF THE LITIGATION 16
205	205	FINANCIER; 17
206	206
207	207	(2) THAT SOME OR ALL OF T HE LITIGATION FINANCING MAY BE 18
208	208	TAXABLE; 19
209	209
210	210	(3) A DESCRIPTION OF THE C ONSUMER’S RIGHT OF RECISSION ; 20
211	211
212	212	(4) AN ITEMIZATION OF CHARGES ; 21
213	213
214	214	(5) THE TOTAL FUNDED AMOU NT PROVIDED TO THE C ONSUMER 22
215	215	UNDER THE LITIGATION FINANCING CONTRACT; 23
216	216
217	217	(6) THE TOTAL AMOUNT DUE FROM THE CONSUMER , IN 6–MONTH 24
218	218	INTERVALS OVER A PERIOD OF 42 MONTHS, INCLUDING ALL CHARGE S AND FEES; 25
219	219
220	220	(7) IF THE CONSUMER SEEKS OR HAS SOUGHT MORE THAN ONE 26
221	221	LITIGATION FINANCING CONTRACT, THE CUMULATIVE AMOUN T DUE FROM THE 27
222	222	CONSUMER FOR EACH TRANSACTION AND CHARGE UNDER ALL LIT IGATION 28
223	223	FINANCING CONTRACTS , IF REPAYMENT IS MADE ANY TIME AFTER THE CONTRACTS 29
224	224	ARE EXECUTED; 30
225	225	6 HOUSE BILL 1274
226	226
227	227
228	228	(8) THAT THERE ARE NO CHARGES OR FEES TO BE PAID B Y THE 1
229	229	CONSUMER OTHER THAN WHAT IS DISCLOSED IN THE LITIGATION FINAN CING 2
230	230	CONTRACT; 3
231	231
232	232	(9) THAT IF THERE IS NO RECOVE RY OF ANY MONEY FROM THE 4
233	233	CONSUMER ’S CIVIL ACTION, THE CONSUMER SHALL O WE NOTHING TO THE 5
234	234	LITIGATION FINANCIER ; AND 6
235	235
236	236	(10) THAT IF THERE IS NOT ENOUG H RECOVERY TO SATISFY THE 7
237	237	TOTAL AMOUNT ASSIGNE D TO THE LITIGATION FINANCIER, THE CONSUMER SHALL 8
238	238	OWE NOTHING IN EXCESS OF THE CONSUMER ’S RECOVERY AMOUNT. 9
239	239
240	240	(D) A LITIGATION FINANCING CONTRACT SHALL INCLU DE: 10
241	241
242	242	(1) TERMS EXPLAINED BY THE FOLLOWING TEXT : 11
243	243
244	244	“CONSUMER’S RIGHT TO CANCELLATION : YOU MAY CANCEL THIS C ONTRACT 12
245	245	WITHOUT PENALTY OR F URTHER OBLIGATION WI THIN FIVE (5) BUSINESS DAYS 13
246	246	FROM THE DATE YOU SI GNED THIS CONTRACT O R RECEIVED F INANCING FROM 14
247	247	(INSERT NAME OF THE L ITIGATION FINANCIER ) BY RETURNING THE FUN DS TO 15
248	248	(INSERT NAME , OFFICE ADDRESS , AND OFFICE HOURS OF THE LITIGATION 16
249	249	FINANCIER) OR BY U.S. MAIL (INSERT NAME AND MAIL ING ADDRESS OF LITIG ATION 17
250	250	FINANCIER). FOR PURPOSES OF THE RETURN DEADLINE BY U.S. MAIL, THE 18
251	251	POSTMARK DATE ON THE RETURNED FUNDS OR , IF MAILED BY REGISTE RED OR 19
252	252	CERTIFIED MAIL , THE DATE OF THE RETU RN RECEIPT REQUESTED SHALL BE 20
253	253	CONSIDERED THE DATE OF RETURN. 21
254	254
255	255	THE LITIGATION FINANC IER AGREES THAT IT H AS NO RIGHT TO AND WILL NOT 22
256	256	MAKE ANY DECISIONS A BOUT THE CONDUCT OF YOUR LAWSUIT OR DISP UTE AND 23
257	257	THAT THE RIGHT TO MA KE THOSE DECISIONS R EMAINS SOLELY WITH Y OU AND YOUR 24
258	258	ATTORNEY. 25
259	259
260	260	THE LITIGATION FINANC IER AGREES THAT IT HA S NO RIGHT TO, AND WILL 26
261	261	NOT DEMAND , REQUEST, RECEIVE, OR EXERCISE ANY RIGH T TO, INFLUENCE, 27
262	262	AFFECT, OR OTHERWISE MAKE AN Y DECISION IN THE HA NDLING, CONDUCT, 28
263	263	ADMINISTRATION , LITIGATION, SETTLEMENT , OR RESOLUTION OF YOU R CIVIL 29
264	264	ACTION, CLAIM, CASE, CAUSE OF ACTION , OR ADMINISTRATIVE PR OCEEDING. ALL 30
265	265	OF THESE RIGHTS REMAIN SOLELY WITH YOU AND YOUR LE GAL REPRESENTATIVE . 31
266	266
267	267	IF THERE IS NO RECOVE RY OF ANY MONEY FROM YOUR CIVIL ACTION , CLAIM, 32
268	268	CASE, CAUSE OF ACTION , OR ADMINISTRATIVE PR OCEEDING OR IF THERE IS NOT 33
269	269	ENOUGH MONEY TO SATI SFY IN FULL THE PORT ION ASSIGNED T O THE LITIGATION 34
270	270	FINANCIER, YOU WILL NOT OWE ANY THING IN EXCESS OF Y OUR RECOVERY . 35 HOUSE BILL 1274 7
271	271
272	272
273	273
274	274	IF THE CONSUMER IS RE PRESENTED BY A LEGAL REPRESENTATIVE IN TH E 1
275	275	CIVIL ACTION THAT IS THE SUBJECT OF THE L ITIGATION FINANCING CONTRACT, 2
276	276	THE LEGAL REPRESENTA TIVE SHALL ACKNOW LEDGE IN THE CONTRAC T THAT THE 3
277	277	LEGAL REPRESENTATIVE AND THE LEGAL REPRES ENTATIVE’S EMPLOYER AND 4
278	278	EMPLOYEES HAVE NOT R ECEIVED OR PAID A RE FERRAL FEE OR ANY OT HER 5
279	279	CONSIDERATION FROM O R TO THE LITIGATION FINANCIER, AND HAVE NO 6
280	280	OBLIGATION TO DO SO IN THE FUTURE. 7
281	281
282	282	IF THE CONSUMER ’S LEGAL REPRESENTATI VE IS A PARTY TO A L ITIGATION 8
283	283	FINANCING CONTRACT R ELATED TO THE CONSUM ER’S CIVIL ACTION THAT IS THE 9
284	284	SUBJECT OF THE LITIG ATION FINANCING CONT RACT, THE LEGAL REPRESENTA TIVE 10
285	285	SHALL DISCLOSE AND D ELIVER THE LITIGATIO N FINANCING CONTRACT TO T HE 11
286	286	CONSUMER . FOLLOWING THIS DISCLO SURE AND DELIVERY , THE CONSUMER SHALL 12
287	287	SIGN AN ACKNOWLEDGME NT THAT THE CONSUMER HAS READ AND UNDERST ANDS 13
288	288	THE TERMS AND CONDIT IONS OF THE LITIGATI ON FINANCING CONTRAC T AND THE 14
289	289	CONSUMER MUST BE PRO VIDED A COPY OF THE ACKNOWLE DGMENT.”; 15
290	290
291	291	(2) TERMS EXPLAINED USING THE FOLLOWING TEXT IN 14 POINT, 16
292	292	BOLD FONT AND IN ALL CAPITAL L ETTERS CONTAINED WIT HIN A BOX: 17
293	293
294	294	“THE FUNDED AMOUNT AND AGREED–UPON CHARGES SHALL B E PAID ONLY 18
295	295	FROM THE PROCEEDS OF YOUR CIVIL ACTION AND SHALL BE PAID ON LY TO THE 19
296	296	EXTENT THAT THERE AR E AVAILABLE PROCEEDS FROM YOUR CIVIL ACTION. YOU 20
297	297	WILL NOT OWE (INSERT NAME OF THE L ITIGATION FINANCIER ) ANYTHING IF THERE 21
298	298	ARE NO PROCEEDS FROM YOUR CIVIL ACTION, UNLESS YOU HAVE VIOL ATED ANY 22
299	299	MATERIAL TERM OF THIS CONTRACT OR YOU HAVE COMMITTED F RAUD AGAINST 23
300	300	THE LITIGATION FINAN CIER.”; AND 24
301	301
302	302	(3) IMMEDIATELY ABOVE THE PLACE ON THE LITIGAT ION FINANCING 25
303	303	CONTRACT WHERE THE C ONSUMER’S SIGNATURE IS REQUI RED, TERMS EXPLAINED 26
304	304	USING THE FOLLOWING TEXT IN 14 POINT, BOLD FONT AND IN ALL CAPITAL 27
305	305	LETTERS: 28
306	306
307	307	“DO NOT SIGN THIS CONT RACT BEFORE YOU READ IT COMPLETELY . IF THIS 29
308	308	CONTRACT CONTAINS AN Y INCOMPLETE SECTION S, YOU ARE ENTITLED TO A 30
309	309	COMPLETELY FILLED –IN COPY OF THE CONTR ACT PRIOR TO SIGNING IT. BEFORE 31
310	310	YOU SIGN THIS C ONTRACT, YOU SHOULD OBTAIN TH E ADVICE OF AN ATTOR NEY. 32
311	311	DEPENDING ON THE CIRC UMSTANCES YOU MAY WA NT TO CONSULT A TAX ADVISOR, 33
312	312	A FINANCIAL PROFESSI ONAL, OR AN ACCOUNTANT .”. 34
313	313
314	314	14–5006. 35
315	315	8 HOUSE BILL 1274
316	316
317	317
318	318	(A) (1) EXCEPT AS OTHERWISE S TIPULATED OR ORDERED BY A COURT, A 1
319	319	PARTY IN A CIVIL ACTION SHALL, WITHOUT WAITING FOR A DISCOVERY REQUEST , 2
320	320	PROVIDE TO EACH OF THE OTHER PARTIES IN THE CIVIL ACTION AND EACH INSURER 3
321	321	THAT HAS A DUTY TO D EFEND ANOTHER PARTY IN THE CIVIL ACTION ANY 4
322	322	LITIGATION FINANCING CONTRACT UNDER WHICH A LITIGATION FINANCIER HAS A 5
323	323	RIGHT TO RECEIVE COM PENSATION THAT IS CO NTINGENT IN ANY RESP ECT ON THE 6
324	324	OUTCOME OF THE CIVIL ACTION. 7
325	325
326	326	(2) DISCLOSURE IS REQUIRE D UNDER PARAGRAPH (1) OF THIS 8
327	327	SUBSECTION REGARDLES S OF WHETHER A CIVIL ACTION HAS FORMALLY 9
328	328	COMMENCED . 10
329	329
330	330	(3) (I) THE DISCLOSURE REQUIR ED UNDER PARAGRAPH (1) OF 11
331	331	THIS SUBSECTION IS A CONTINUING OBLIGATIO N. 12
332	332
333	333	(II) WITHIN 30 DAYS AFTER ENTERING INTO A LITI GATION 13
334	334	FINANCING CONTRACT OR AMENDING AN EXISTING LITIGATI ON FINANCING 14
335	335	CONTRACT, A PARTY IN A CIVIL ACTION SHALL DISCLOSE AND DELIV ER A NEW OR 15
336	336	AMENDED LITIGATION F INANCING CONTRACT TO ALL OTHER PARTIES AND EA CH 16
337	337	INSURER THAT HAS A D UTY TO DEFEND ANOTHE R PARTY IN THE CIVIL ACTION. 17
338	338
339	339	(B) (1) SUBJECT TO PARAGRAPH (2) OF THIS SUBSECTION, THE 18
340	340	ADMISSIBILITY OF A LITIGATION FINANCING CONTRACT IN A CIVIL ACTION SHALL 19
341	341	BE GOVERNED BY THE MARYLAND RULES OF EVIDENCE. 20
342	342
343	343	(2) A LITIGATION FINANCING CONTRACT MAY NOT BE ADMISSIBLE IN 21
344	344	A CIVIL ACTION SOLELY ON THE BASIS OF THE DISCLOSURE REQUIRED UNDER THIS 22
345	345	SUBTITLE. 23
346	346
347	347	(C) THE EXISTENCE OF A LI TIGATION FINANCING C ONTRACT AND EACH 24
348	348	PARTICIPANT OR PART Y TO A LITIGATION FINA NCING CONTRACT IS A PERMISSIBLE 25
349	349	SUBJECT OF DISCOVERY IN ANY CIVIL ACTION FOR WHICH LITIGATION FIN ANCING 26
350	350	IS PROVIDED UNDER TH E LITIGATION FINANCI NG CONTRACT , REGARDLESS OF 27
351	351	WHETHER A CIVIL ACTION HAS FORMALLY COMMENCED . 28
352	352
353	353	14–5007. 29
354	354
355	355	(A) THIS SUBTITLE APPLIES TO ANY CIVIL ACTION FILED OR CERTIFIED A S 30
356	356	A CLASS ACTION IN WH ICH A LITIGATION FIN ANCIER PROVIDES LITI GATION 31
357	357	FINANCING TO A CONSU MER INVOLVED IN THE CIVI L ACTION. 32
358	358
359	359	(B) A LITIGATION FINANCIER SHALL: 33
360	360	HOUSE BILL 1274 9
361	361
362	362
363	363	(1) OWE A FIDUCIARY DUTY TO EACH CLASS MEMBER AND INT ENDED 1
364	364	BENEFICIAR Y OF A PUTATIVE OR CER TIFIED CLASS; AND 2
365	365
366	366	(2) ACT IN A MANNER CONSI STENT WITH THE LITIG ATION 3
367	367	FINANCIER’S FIDUCIARY DUTY THR OUGHOUT THE CIVIL ACTION. 4
368	368
369	369	(C) (1) IN ADDITION TO THE DI SCLOSURE S REQUIRED UNDER THIS 5
370	370	SUBTITLE, A LEGAL REPRESENTATI VE OF A PUTATIVE OR CERTIFIED CLASS SHAL L 6
371	371	DISCLOSE TO EACH PARTY, PUTATIVE OR CERTIFIE D CLASS MEMBER , AND THE 7
372	372	COURT ANY LEGAL , FINANCIAL, OR OTHER RELATIONSH IP BETWEEN THE LEGAL 8
373	373	REPRESENTATIVE AND T HE LITIGATION FINANC IER. 9
374	374
375	375	(2) THE LEGAL REPRESENTAT IVE OF THE PUTATIVE OR CERTIFIED 10
376	376	CLASS SHALL DISCLOSE TO EACH PUTATIVE OR CERTIFIE D CLASS MEMBER A TRU E 11
377	377	AND CORRECT COPY OF ANY LITIGATION FINAN CING CONTRACT ON REQ UEST. 12
378	378
379	379	14–5008. 13
380	380
381	381	(A) A LITIGATION FINANCIER MAY NOT: 14
382	382
383	383	(1) PAY, OFFER, OR ACCEPT A COMMISSI ON, REFERRAL FEE , REBATE, 15
384	384	OR OTHER FORM OF CON SIDERATION TO OR FROM ANY PERSON I N EXCHANGE FOR 16
385	385	REFERRING A CONSUMER TO A LITIGATION FINA NCIER; 17
386	386
387	387	(2) CHARGE A RATE OF INTE REST THAT EXCEEDS TH E RATE OF 18
388	388	INTEREST ALLOWED UND ER TITLE 12, SUBTITLE 1 OF THIS ARTICLE; 19
389	389
390	390	(3) ADVERTISE FALSE OR MI SLEADING INFORMATION REGARDING 20
391	391	THE LITIGATION FINAN CIER’S PRODUCTS OR SERVIC ES; 21
392	392
393	393	(4) REFER OR REQUIRE A CO NSUMER TO HIRE OR EN GAGE ANY 22
394	394	PERSON PROVIDING ANY GOODS OR RENDERING A NY SERVICES TO THE C ONSUMER; 23
395	395
396	396	(5) FAIL TO PROMPTLY DELI VER A FULLY COMPLETE D AND SIGNED 24
397	397	LITIGATION FINANCING CONTRACT T O A CONSUMER OR THE CONSUMER ’S LEGAL 25
398	398	REPRESENTATIVE ; 26
399	399
400	400	(6) ATTEMPT TO SECURE A R EMEDY OR OBTAIN A WA IVER OF A 27
401	401	REMEDY, INCLUDING COMPENSATO RY, STATUTORY, OR PUNITIVE DAMAGES , THAT A 28
402	402	CONSUMER MAY BE ENTI TLED TO PURSUE OR OT HERWISE RECOVE R; 29
403	403
404	404	(7) OFFER OR PROVIDE LEGA L ADVICE TO THE CONS UMER; 30
405	405	10 HOUSE BILL 1274
406	406
407	407
408	408	(8) ASSIGN, INCLUDING SECURITIZI NG, A LITIGATION FINANCI NG 1
409	409	CONTRACT IN WHOLE OR IN PART; 2
410	410
411	411	(9) REPORT A CONSUMER TO A CONSUMER CREDIT RE PORTING 3
412	412	AGENCY IF INSUFFICIE NT FUNDS REMAIN TO R EPAY THE LITIGATION FINANCIER I N 4
413	413	FULL FROM THE PROCEE DS RECEIVED FROM ANY JUDGMENT, AWARD, 5
414	414	SETTLEMENT , VERDICT, OR OTHER FORM OF MON ETARY RELIEF OBTAINE D IN A 6
415	415	CIVIL ACTION THAT IS THE SUBJECT OF THE L ITIGATION FINANCING CONTRACT; 7
416	416
417	417	(10) DEMAND, REQUEST, RECEIVE, OR EXERCISE A RIGHT OF THE 8
418	418	CONSUMER OR THE CONS UMER’S LEGAL REPRESENTATI VE TO INFLUENCE , AFFECT, 9
419	419	OR OTHERWISE MAKE A DECISION IN THE HAND LING, CONDUCT, ADMINISTRATION , 10
420	420	LITIGATION, SETTLEMENT , OR RESOLUTION OF A C IVIL ACTION FOR WHIC H THE 11
421	421	LITIGATION FINANCIER HAS PROVIDED LITIGAT ION FINANCING; OR 12
422	422
423	423	(11) KNOWINGLY ENTER INTO AN AGREEMENT CREATIN G A RIGHT FOR 13
424	424	ANYONE OTHER THAN TH E NAMED PARTIES , COUNSEL OF RECORD , OR LAW FIRM OF 14
425	425	RECORD TO MAKE OR RE CEIVE ANY PAYMENT TH AT IS CONTINGENT ON THE 15
426	426	OUTCOME OF A CIVIL ACTION. 16
427	427
428	428	(B) A PERSON WHO PROVIDES GOODS OR RENDERS A S ERVICE TO A 17
429	429	CONSUMER MAY NOT : 18
430	430
431	431	(1) HAVE A FINANCIAL INTE REST IN THE CONSUMER ’S LITIGATION 19
432	432	FINANCING CONTRACT ; OR 20
433	433
434	434	(2) RECEIVE A COMMISSION , REFERRAL FEE , REBATE, OR OTHER 21
435	435	FORM OF CONSIDERATIO N FROM A LITIGATION FINAN CIER OR AN AGENT OR 22
436	436	AFFILIATE OF THE LIT IGATION FINANCIER . 23
437	437
438	438	14–5009. 24
439	439
440	440	(A) THE ATTORNEY GENERAL MAY ENFORCE T HE PROVISIONS OF THI S 25
441	441	SUBTITLE. 26
442	442
443	443	(B) A VIOLATION OF THIS SU BTITLE BY A LITIGATI ON FINANCIER SHALL 27
444	444	RENDER A LITIGATION FINANCING CONTRACT V OID AND UNENFORCEABL E BY THE 28
445	445	LITIGATION FINANCIER AND ANY SUCCESSOR –IN–INTEREST TO THE LITI GATION 29
446	446	FINANCING CONTRACT . 30
447	447
448	448	(C) IF A LITIGATION FINAN CIER CHARGES A RATE OF INTEREST THAT 31
449	449	EXCEEDS THE RATE OF INTEREST ALLOW ED UNDER TITLE 12, SUBTITLE 1 OF THIS 32 HOUSE BILL 1274 11
450	450
451	451
452	452	ARTICLE, THE LITIGATION FINAN CIER IS SUBJECT TO THE EN FORCEMENT AND 1
453	453	PENALTY PROVISIONS C ONTAINED IN TITLE 12, SUBTITLE 1 OF THIS ARTICLE. 2
454	454
455	455	14–5010. 3
456	456
457	457	THIS SUBTITLE MAY BE CITED AS THE MARYLAND TRANSPARENCY IN 4
458	458	THIRD–PARTY LITIGATION FINANCING ACT. 5
459	459
460	460	SECTION 2. AND BE IT FURTHER ENACTED, That, if any provision of this Act or 6
461	461	the application of any provision of this Act to any person or circumstance is held invalid for 7
462	462	any reason in a court of competent jurisdiction, the invalidity does not affect other 8
463	463	provisions or any other application of this Act that can be given effect without the invalid 9
464	464	provision or application, and for this purpose the provisions of this Act are declared 10
465	465	severable. 11
466	466
467	467	SECTION 3. AND BE IT FURTHER ENACTED, That this Act shall be construed to 12
468	468	apply only prospectively and may not be applied or interpreted to have any effect on or 13
469	469	application to any litigation financing contract, as defined in § 14–5001 of the Commercial 14
470	470	Law Article, as enacted by Section 1 of this Act, entered into before the effective date of this 15
471	471	Act. 16
472	472
473	473	SECTION 4. AND BE IT FURTHER ENACTED, That this Act shall take effect 17
474	474	October 1, 2025. 18