SECONDREGULARSESSION
HOUSECOMMITTEESUBSTITUTEFOR
HOUSEBILLNO.2771
101STGENERALASSEMBLY
5551H.02C DANARADEMANMILLER,ChiefClerk
ANACT
Toamendchapter436,RSMo,byaddingtheretotwenty-twonewsectionsrelatingto
litigation,withpenaltyprovisions.
BeitenactedbytheGeneralAssemblyofthestateofMissouri,asfollows:
SectionA.Chapter436,RSMo,isamendedbyaddingtheretotwenty-twonew
2sections,tobeknownassections436.550,436.552,436.554,436.556,436.558,436.560,
3436.562,436.564,436.566,436.568,436.570,436.571,436.572,436.573,436.574,436.575,
4436.576,436.577,436.578,436.579,436.580,and1,toreadasfollows:
436.550.Sections436.550to436.570shallbeknownandmaybecitedasthe
2"ConsumerLegalFundingModelAct".
436.552.Asusedinsections436.550to436.570,thefollowingtermsmean:
2 (1)"Advertise",publishingordisseminatinganywritten,electronic,orprinted
3communicationoranycommunicationbymeansofrecordedtelephonemessagesor
4transmittedonradio,television,theinternet,orsimilarcommunicationsmedia,
5includingfilmstrips,motionpictures,andvideos,published,disseminated,circulated,
6orplacedbeforethepublic,directlyorindirectly,forthepurposeofinducinga
7consumertoenterintoaconsumerlegalfundingcontract;
8 (2)"Charges",theamountofmoneystobepaidtotheconsumerlegalfunding
9companybyoronbehalfoftheconsumerabovethefundedamountprovidedbyoron
10behalfofthecompanytoaconsumerundersections436.550to436.570.Charges
11includealladministrative,origination,underwriting,orotherfees,nomatterhow
12denominated;
13 (3)"Consumer",anaturalpersonwhohasapendinglegalclaimand:
14 (a)ResidesorisdomiciledinMissouri;and
EXPLANATION—Matterenclosedinbold-facedbrackets[thus] intheabovebillisnotenactedandis
intendedtobeomittedfromthelaw.Matterinbold-facetypeintheabovebillisproposedlanguage. 15 (b)HasalegalclaiminMissouri;
16 (4)"Consumerlegalfundingcompany"or"company",apersonorentitythat
17entersintoaconsumerlegalfundingcontractwithaconsumer.Thetermshallnot
18include:
19 (a)Animmediatefamilymemberoftheconsumer;
20 (b)Abank,lender,financingentity,orotherspecialpurposeentity:
21 a.Thatprovidesfinancingtoaconsumerlegalfundingcompany;or
22 b.Towhichaconsumerlegalfundingcompanygrantsasecurityinterestor
23transfersanyrightsorinterestinaconsumerlegalfunding;or
24 (c)Anattorneyoraccountantwhoprovidesservicestoaconsumer;
25 (5)"Consumerlegalfundingcontract",anonrecoursecontractualtransaction
26inwhichaconsumerlegalfundingcompanypurchasesandaconsumerassignstothe
27companyacontingentrighttoreceiveanamountofthepotentialproceedsofa
28settlement,judgment,award,orverdictobtainedintheconsumer'slegalclaim;
29 (6)"Fundedamount",theamountofmoneysprovidedtooronbehalfofthe
30consumerintheconsumerlegalfundingcontract."Fundedamount"shallnotinclude
31charges;
32 (7)"Fundingdate",thedateonwhichthefundedamountistransferredtothe
33consumerbytheconsumerlegalcompanyeitherbypersonaldelivery,viawire,
34automatedclearinghousetransfer,orotherelectronicmeans,orbyinsured,certified,or
35registeredUnitedStatesmail;
36 (8)"Immediatefamilymember",aparent;sibling;childbyblood,adoption,or
37marriage;spouse;grandparent;orgrandchild;
38 (9)"Legalclaim",abonafidecivilclaimorcauseofaction,anyalternative
39disputeresolutionproceeding,oranyadministrativeproceedingbeforeanyagencyor
40instrumentalityofthisstate;
41 (10)"Resolutiondate",thedatetheamountfundedtotheconsumer,plusthe
42agreed-uponcharges,isdeliveredtotheconsumerlegalfundingcompany.
436.554.1.Allconsumerlegalfundingcontractsshallmeetthefollowing
2requirements:
3 (1)Thecontractshallbecompletelyfilledinwhenpresentedtotheconsumerfor
4signature;
5 (2)Thecontractshallcontain,inboldandboxedtype,arightofrescission
6allowingtheconsumertocancelthecontractwithoutpenaltyorfurtherobligationif,
7withinfivebusinessdaysafterthefundingdate,theconsumereither:
HCSHB2771 2 8 (a)Returnsthefullamountofthedisbursedfundstotheconsumerlegalfunding
9companybydeliveringthecompany'suncashedchecktothecompany'sofficeinperson;
10or
11 (b)Mailsanoticeofcancellationbyinsured,certified,orregisteredUnited
12Statesmailtotheaddressspecifiedinthecontractandincludesareturnofthefull
13amountofdisbursedfundsinsuchmailingintheformofthecompany'suncashedcheck
14oraregisteredorcertifiedcheckormoneyorder;
15 (3)Thecontractshallcontaintheinitialsoftheconsumeroneachpage;and
16 (4)Thecontractshallrequiretheconsumertogivenonrevocablewritten
17directiontotheconsumer'sattorneyrequiringtheattorneytonotifytheconsumerlegal
18fundingcompanywhenthelegalclaimhasbeenresolved.Oncetheconsumerlegal
19fundingcompanyconfirmsinwritingtheamountdueunderthecontract,the
20consumer'sattorneyshallpay,fromtheproceedsoftheresolutionofthelegalclaim,
21theconsumerlegalfundingcompanytheamountduewithintenbusinessdays.
22 2.Theconsumerlegalfundingcompanyshallprovidetheconsumer'sattorney
23withawrittennotificationoftheconsumerlegalfundingcontractprovidedtothe
24consumerwithinthreebusinessdaysofthefundingdatebywayofpostalmail,courier
25service,facsimile,orothermeansofproofofdeliverymethod.
26 3.Aconsumerlegalfundingcontractshallbeenteredintoonlyifthecontract
27involves:
28 (1)Anexistinglegalclaimmadebyoronbehalfoftheconsumer;or
29 (2)Anexistingproceedingthatshallresolvetheconsumer'slegalclaiminwhich
30theconsumerisrepresentedbyanattorney.
436.556.Noconsumerlegalfundingcompanyshall:
2 (1)Payoroffertopaycommissions,referralfees,orotherformsof
3considerationtoanyattorney,lawfirm,medicalprovider,chiropractor,orphysical
4therapistoranyoftheiremployeesforreferringaconsumertothecompany;
5 (2)Acceptanycommissions,referralfees,rebates,orotherformsof
6considerationfromanattorney,lawfirm,medicalprovider,chiropractor,orphysical
7therapistoranyoftheiremployees;
8 (3)Intentionallyadvertisemateriallyfalseormisleadinginformationregarding
9itsproductsorservices;
10 (4)Refer,infurtheranceofaninitiallegalfunding,acustomerorpotential
11customertoaspecificattorney,lawfirm,medicalprovider,chiropractor,orphysical
12therapistoranyoftheiremployees.However,thecompanymayreferthecustomertoa
13localorstatebarassociationreferralserviceifacustomerneedslegalrepresentation;
HCSHB2771 3 14 (5)Failtopromptlysupplyacopyoftheexecutedcontracttotheconsumer's
15attorney;
16 (6)Knowinglyprovidefundingtoaconsumerwhohaspreviouslyassignedor
17soldaportionoftherighttoproceedsfromtheconsumer'slegalclaimunlessthe
18consumerlegalfundingcompanypaysorpurchasestheentireunsatisfiedfunded
19amountandcontractedchargesfromthepriorconsumerlegalfundingcompanyorthe
20twocompaniesagreetoalesseramountinwriting.However,multiplecompaniesmay
21agreetocontemporaneouslyprovidefundingtoaconsumer,providedthattheconsumer
22andtheconsumer'sattorneyconsenttothearrangementinwriting;
23 (7)Receiveanyrighttoormakeanydecisionswithrespecttotheconductofthe
24underlyinglegalclaimoranysettlementorresolutionthereof.Therighttomakesuch
25decisionsshallremainsolelywiththeconsumerandtheattorneyinthelegalclaim;or
26 (8)Knowinglypayoroffertopayforcourtcosts,filingfees,orattorney'sfees
27eitherduringoraftertheresolutionofthelegalclaimbyusingfundsfromtheconsumer
28legalfundingcontract.Theconsumerlegalfundingcontractshallincludeaprovision
29advisingtheconsumerthatthefundingshallnotbeusedforsuchcostsorfees.
436.558.1.Thecontractedamounttobepaidtotheconsumerlegalfunding
2companyshallbesetasapredeterminedamountbaseduponintervalsoftimefromthe
3fundingdatetotheresolutiondateandshallnotbedeterminedasapercentageofthe
4recoveryfromthelegalclaim.
5 2.Noconsumerlegalfundingcontractshallbevalidifitstermsexceedaperiod
6offorty-eightmonths.Noconsumerlegalfundingcontractshallbeautomatically
7renewed.
436.560.Allconsumerlegalfundingcontractsshallcontainthedisclosures
2specifiedinthissection,whichshallconstitutematerialtermsofthecontract.Unless
3otherwisespecified,thedisclosuresshallbetypedinatleasttwelve-pointbold-typefont
4andbeplacedclearlyandconspicuouslywithinthecontract,asfollows:
5 (1)Onthefrontpageunderappropriateheadings,languagespecifying:
6 (a)Thefundedamounttobepaidtotheconsumerbytheconsumerlegal
7fundingcompany;
8 (b)Anitemizationofone-timecharges;
9 (c)Thetotalamounttobeassignedbytheconsumertothecompany,including
10thefundedamountandallcharges;and
11 (d)Apaymentscheduletoincludethefundedamountandcharges,listingall
12datesandtheamountdueattheendofeachone-hundred-eighty-dayperiodfromthe
13fundingdateuntilthedatethemaximumamountduetothecompanybytheconsumer
14tosatisfytheamountduepursuanttothecontract;
HCSHB2771 4 15 (2)Withinthebodyofthecontract,inaccordancewiththeprovisionsunder
16subdivision(2)ofsubsection1ofsection436.554:"Consumer'sRighttoCancellation:
17Youmaycancelthiscontractwithoutpenaltyorfurtherobligationwithinfivebusiness
18daysafterthefundingdateifyoueither:
19 (a)Returnthefullamountofthedisbursedfundstotheconsumerlegalfunding
20companybydeliveringthecompany'suncashedchecktothecompany'sofficeinperson;
21or
22 (b)Mailanoticeofcancellationbyinsured,certified,orregisteredUnitedStates
23mailtothecompanyattheaddressspecifiedinthecontractandincludeareturnofthe
24fullamountofdisbursedfundsinsuchmailingintheformofthecompany'suncashed
25checkoraregisteredorcertifiedcheckormoneyorder.";
26 (3)Withinthebodyofthecontract,languagespecifyingthattheconsumerlegal
27fundingcompanyshallhavenoroleindecidingwhether,when,orforhowmuchthe
28legalclaimissettledandthattheconsumerortheconsumer'sattorneyshallnotifythe
29companyofwhethertheoutcomeofthelegalclaimwillbebysettlementorby
30adjudicationpriortotheresolutiondate.Thecompanymayseekupdatedinformation
31aboutthestatusofthelegalclaimbutinnoeventshallthecompanyinterferewiththe
32independentprofessionaljudgmentoftheattorneyinthehandlingofthelegalclaimor
33anysettlementthereof;
34 (4)Withinthebodyofthecontract,inallcapitallettersandinatleasttwelve-
35pointbold-typefontcontainedwithinabox:"THEFUNDEDAMOUNT AND
36AGREED-UPON CHARGESSHALLBEPAIDONLYFROMTHEPROCEEDSOF
37YOURLEGALCLAIMANDSHALLBEPAIDONLYTOTHEEXTENTTHAT
38THEREAREAVAILABLEPROCEEDSFROMYOURLEGALCLAIM.IFTHERE
39ISNORECOVERYOFANYDAMAGES FROMYOURLEGALCLAIMORIF
40THEREISNOTENOUGHMONEYTOPAYBACKTHECONSUMER LEGAL
41FUNDINGCOMPANYINFULL,YOUWILLNOTBEOBLIGATEDTOPAYTHE
42CONSUMER LEGALFUNDINGCOMPANYANYTHINGINEXCESSOFYOUR
43RECOVERYUNLESSYOUHAVEVIOLATEDTHISCONTRACT.YOUWILL
44NOTOWE(INSERTNAMEOFTHECONSUMER LEGALFUNDINGCOMPANY)
45ANYTHING IFTHEREARENOPROCEEDS FROMYOURLEGALCLAIM
46UNLESSYOUORYOURATTORNEYHAVEVIOLATEDANYMATERIALTERM
47OFTHISCONTRACT ORUNLESSYOUHAVECOMMITTED FRAUDAGAINST
48THECONSUMER LEGALFUNDINGCOMPANY.";and
49 (5)Locatedimmediatelyabovetheplaceonthecontractwheretheconsumer's
50signatureisrequired,intwelve-pointfont:"Donotsignthiscontractbeforeyoureadit
51completelyorifitcontainsanyblankspaces.Youareentitledtoacompletelyfilled-in
HCSHB2771 5 52copyofthecontract.Beforeyousignthiscontract,youshouldobtaintheadviceofan
53attorney.Dependingonthecircumstances,youmaywanttoconsultatax,publicor
54privatebenefitsplanning,orfinancialprofessional.Youacknowledgethatyour
55attorneyinthelegalclaimhasprovidednotax,publicorprivatebenefitplanning,or
56financialadviceregardingthistransaction."
436.562.1.Nothinginsections436.550to436.570shallbeconstruedtorestrict
2theexerciseofpowersortheperformanceofthedutiesofthestateattorneygeneralthat
3heorsheisauthorizedtoexerciseorperformbylaw.
4 2.Ifacourtofcompetentjurisdictiondeterminesthataconsumerlegalfunding
5companyhasintentionallyviolatedtheprovisionsofsections436.550to436.570ina
6consumerlegalfundingcontract,theconsumerlegalfundingcontractshallbevoided.
436.564.1.Thecontingentrighttoreceiveanamountofthepotentialproceeds
2ofalegalclaimisassignable.
3 2.Nothingcontainedinsections436.550to436.570shallbeconstruedtocause
4anyconsumerlegalfundingcontractconformingtosections436.550to436.570tobe
5deemedaloanortobesubjecttoanyoftheprovisionsgoverningloans.Aconsumer
6legalfundingcontractthatcomplieswithsections436.550to436.570isnotsubjectto
7anyotherstatutoryorregulatoryprovisionsgoverningloansorinvestmentcontracts.
8Totheextentthatsections436.550to436.570conflictwithanyotherlaw,suchsections
9shallsupersedetheotherlawforthepurposesofregulatingconsumerlegalfundingin
10thisstate.
11 3.Onlyattorney'sliensrelatedtothelegalclaim,Medicare,orotherstatutory
12liensrelatedtothelegalclaimshalltakepriorityoverclaimstoproceedsfromthe
13consumerlegalfundingcompany.Allotherliensandclaimsshalltakepriorityby
14normaloperationoflaw.
15 4.Noconsumerlegalfundingcompany,regardlessoftheoutcomeofaclaimto
16proceeds,shallattempttonegativelyimpactaconsumer'scredithistory,exceptinthe
17casesofbreachofcontractandfraud.
436.566.Anattorneyorlawfirmretainedbytheconsumerinthelegalclaim
2shallnothaveafinancialinterestintheconsumerlegalfundingcompanyoffering
3consumerlegalfundingtothatconsumer.Additionally,anypracticingattorneywhohas
4referredtheconsumertohisorherretainedattorneyshallnothaveafinancialinterest
5intheconsumerlegalfundingcompanyofferingconsumerlegalfundingtothat
6consumer.
436.568.Nocommunicationbetweentheconsumer'sattorneyinthelegalclaim
2andtheconsumerlegalfundingcompanyasitpertainstotheconsumerlegalfunding
HCSHB2771 6 3contractshalllimit,waive,orabrogatethescopeornatureofanystatutoryorcommon-
4lawprivilege,includingthework-productdoctrineandattorney-clientprivilege.
436.570.1.Unlessaconsumerlegalfundingcompanyhasfirstregistered
2pursuanttothissection,thecompanyshallnotengageinthebusinessofconsumerlegal
3fundinginthisstate.
4 2.Anapplicant'sregistrationshallbefiledinthemannerprescribedbythe
5divisionoffinanceandshallcontaintheinformationthedivisionrequirestomakean
6evaluationofthecharacterandfitnessoftheapplicantcompany.Theinitialapplication
7shallbeaccompaniedbyafive-hundred-dollarfee.Arenewalregistrationshallinclude
8atwo-hundred-dollarfee.Aregistrationshallberenewedeverytwoyearsandexpireon
9Septemberthirtieth.
10 3.Acertificateofregistrationshallnotbeissuedunlessthedivisionoffinance,
11uponinvestigation,findsthatthecharacterandfitnessoftheapplicantcompany,andof
12theofficersanddirectorsthereof,aresuchastowarrantbeliefthatthebusinessshall
13operatehonestlyandfairlywithinthepurposesofsections436.550to436.570.
14 4.Everyregistrantshallalso,atthetimeoffilingsuchapplication,filewiththe
15divisionoffinance,ifthedivisionoffinancesorequires,abondsatisfactorytothe
16divisionoffinanceinanamountnottoexceedfiftythousanddollars.Inlieuofthebond
17attheoptionoftheregistrant,theregistrantmaypostanirrevocableletterofcredit.
18Thetermsofthebondshallrunconcurrentlywiththeperiodoftimeduringwhichthe
19registrationshallbeineffect.Thebondshallprovidethattheregistrantshallfaithfully
20conformtoandabidebytheprovisionsofsections436.550to436.570,toallrules
21lawfullymadebytheadministratorundersections436.550to436.570,andtoanysuch
22personorpersonsanyandallamountsofmoneysthatmaybecomedueorowingtothe
23stateortosuchpersonorpersonsfromtheregistrantunderandbyvirtueofsections
24436.550to436.570duringtheperiodforwhichthebondisgiven.
25 5.Uponwrittenrequest,theapplicantisentitledtoahearingonthequestionof
26theapplicant'squalificationsforregistrationif:
27 (1)Thedivisionoffinancenotifiestheapplicantinwritingthattheapplicationis
28denied;or
29 (2)Thedivisionoffinancehasnotissuedaregistrationwithinsixtydaysofthe
30datetheapplicationfortheregistrationwasfiled.
31
32Arequestforahearingshallnotbemademorethanfifteendaysafterthedivisionof
33financemailsawrittennoticetotheapplicantstatingthattheapplicationisdeniedand
34disclosingfindingsinsupportofdenialoftheapplication.
HCSHB2771 7 35 6.Notwithstandingthepriorapprovalrequirementofsubsection1ofthis
36section,aconsumerlegalfundingcompanythatregisteredwiththedivisionoffinance
37betweentheeffectivedateofsections436.550to436.570andsixmonthsthereaftermay
38engageinconsumerlegalfundingwhilethecompany'sregistrationisawaitingapproval
39bythedivisionoffinance.Allfundingcontractsineffectpriortotheeffectivedateof
40sections436.550to436.570arenotsubjecttothetermsofsections436.550to436.570.
41 7.Noconsumerlegalfundingcompanyshalluseanyconsumerlegalfunding
42contractforminthisstateunlessithasbeenfiledwiththedivisionoffinancein
43accordancewiththefilingproceduressetforthbythedivisionoffinance.
44 8.Thedivisionoffinancemay,afternoticeandhearingunderchapter536,
45imposeanadministrativefinenottoexceedonethousanddollarsperviolationagainsta
46consumerlegalfundingcompanythatisfoundtohaveknowinglyandwillfullyviolated
47sections436.550to436.570.
48 9.Thedivisionoffinanceshallhavetheauthoritytopromulgaterulestocarry
49outtheprovisionsofsections436.550to436.570.Anyruleorportionofarule,asthat
50termisdefinedinsection536.010,thatiscreatedundertheauthoritydelegatedinthis
51sectionshallbecomeeffectiveonlyifitcomplieswithandissubjecttoallofthe
52provisionsofchapter536and,ifapplicable,section536.028.Thissectionandchapter
53536arenonseverable,andifanyofthepowersvestedwiththegeneralassembly
54pursuanttochapter536toreview,todelaytheeffectivedate,ortodisapproveandannul
55arulearesubsequentlyheldunconstitutional,thenthegrantofrulemakingauthority
56andanyruleproposedoradoptedafterAugust28,2022,shallbeinvalidandvoid.
436.571.Asusedinsections436.571to436.580,thefollowingtermsmean:
2 (1)"Consumer",anynaturalpersonwhoresides,ispresent,orisdomiciledin
3thisstateorwhoisormaybecomeaplaintifforcomplainantinalawsuitorotherlegal
4disputeinthisstate;
5 (2)"Legalrepresentative",anattorney,groupofattorneys,lawfirm,orother
6partywhomayrepresentapersonorpersonsinalegaldisputeinthisstate;
7 (3)"Litigationactivities",anylegalworkandadvicedirectlyrelatedtothe
8prosecutionofalegalclaimasdefinedundersubdivision(9)ofsection436.552,
9includingfilings,legaldocumentpreparationanddrafting,appeals,creationofa
10litigationstrategy,draftingtestimony,andrelatedlitigation.Fundsprovidedtoa
11consumerforhisorherpersonalneedsandusearenotlitigationactivities;
12 (4)"Litigationfinancer",aperson,groupofpersons,orlegalentityengagedin
13thebusinessoflitigationfinancingoranyothermechanismcreatedwiththeintentofso
14doing;
HCSHB2771 8 15 (5)"Litigationfinancing",thefundingoflitigationactivitiesbyentitiesother
16thanthepartiesthemselves,theircounsel,orotherentitieswithapreexisting
17contractualrelationshipwithoneoftheparties,suchasanindemnitororaliability
18insurer;
19 (6)"Litigationfinancingtransaction",anonrecoursetransactioninwhich
20financingisprovidedtoaconsumerinreturnforaconsumerassigningtothelitigation
21financeracontingentrighttoreceiveanamountofthepotentialproceedsofthe
22consumer'sjudgment,award,settlement,orverdictobtainedwithrespecttothe
23consumer'slegalclaimoragreeingtopaythelitigationfinancerinterestorotherfeesfor
24thefinancingprovided."Litigationfinancing"shallnotincludelegalrepresentation
25servicesprovidedtoaconsumeronacontingencyfeebasis,orlegalcostsadvancedbya
26legalrepresentative,ifsuchservicesorcostsareprovidedtooronbehalfofaconsumer
27byanattorneyrepresentingtheconsumerinthedisputeandinaccordancewithrule4
28oftherulesofthesupremecourt;
29 (7)"Medicalprovider",anypersonorbusinessprovidingmedicalservicesof
30anykindtoaconsumerincluding,butnotlimitedto,physicians,nursepractitioners,
31hospitals,physicaltherapists,chiropractors,orradiologistsaswellasanyoftheir
32employeesorcontractorsoranypracticegroups,partnerships,orincorporationsofthe
33same.
436.572.1.(1)Nolitigationfinancershallengageinalitigationfinancing
2transactioninthisstateunlessitisregisteredasalitigationfinancerinthisstate.
3 (2)Alitigationfinancerthatisabusinessentityorpartnershipisregisteredin
4thisstateif:
5 (a)Ithasastatusofactiveandingoodstandingasreflectedintherecordsofthe
6secretaryofstate;and
7 (b)Itscharter,articlesoforganization,certificateoflimitedpartnership,or
8otherorganizationaldocument,or,ifaforeignentity,itsMissouriapplicationfora
9certificateofauthority,containsastatementthatitshallbedesignatedasalitigation
10financerpursuanttosections436.571to436.580.
11 (3)Alitigationfinancerthatisnotabusinessentityorpartnershipisregistered
12inthisstateifitfilesanapplicationforregistrationasalitigationfinanceronaform
13prescribedbythesecretaryofstate,alongwithafilingfeeofonehundreddollars,that
14contains:
15 (a)Theapplicant'sfulllegalname;
16 (b)Thebusinessnameoftheapplicant,ifany;
17 (c)Thephysicalstreetaddressandmailingaddressoftheapplicant;
18 (d)Atelephonenumberthroughwhichtheapplicantcanbereached;
HCSHB2771 9 19 (e)Thename,physicalstreetaddress,mailingaddress,andtelephonenumber
20foraMissouriregisteredagentappointedtoacceptserviceofprocessonbehalfofthe
21applicant;
22 (f)Astatementthattheapplicantshallbedesignatedasalitigationfinancer
23pursuanttosections436.571to436.580;and
24 (g)Anyotherinformationthesecretaryofstatedeemsnecessary.
25 2.Eachlitigationfinancershallfilewiththesecretaryofstateasuretybondof
26notlessthanfiftythousanddollars.Thebondshallbepayabletothisstatefortheuseof
27theattorneygeneralandanypersonwhomayhaveacauseofactionagainsttheobliger
28ofthebondforanyviolationofsections436.571to436.580.Thebondshallcontinuein
29effectsolongasalitigationfinancerisdesignatedasalitigationfinancerintherecords
30ofthesecretaryofstate.
31 3.Alitigationfinancershallamenditsregistrationwiththesecretaryofstate
32undersubsection1ofthissectionwithinthirtydayswhenevertheinformationcontained
33insuchrecordchangesorbecomesinaccurateorincompleteinanyrespect.Alitigation
34financerthatisnotabusinessentityorpartnershipmayamenditsregistrationwiththe
35secretaryofstatebyfilinganamendmentonaformprescribedbythesecretaryofstate,
36alongwithafilingfeeoftwentydollars.
37 4.Alldocumentsfiledpursuanttothissectionarepublicrecord.
436.573.1.Alitigationfinancershallnot:
2 (1)Payoroffercommissions,referralfees,orotherformsofconsiderationto
3anylegalrepresentative,medicalprovider,oranyoftheiremployeesforreferringa
4consumertoalitigationfinancer;
5 (2)Acceptanycommissions,referralfees,rebates,orotherformsof
6considerationfromalegalrepresentative,medicalprovider,oranyoftheiremployees;
7 (3)Knowinglyadvertisefalseormisleadinginformationregardingitsproducts
8orservices;
9 (4)Referaconsumerorpotentialconsumertoaspecificlegalrepresentative,
10medicalprovider,oranyoftheiremployees;
11 (5)Failtopromptlysupplycopiesofanycompletelitigationfinancingcontracts
12totheconsumerandtheconsumer'slegalrepresentative;
13 (6)Attempttosecurearemedyorobtainawaiverofanyremedyincluding,but
14notlimitedto,compensatory,statutory,orpunitivedamages,thattheconsumermight
15otherwisebeornotbeentitledtopursue;
16 (7)Attempttoeffectarbitrationorotherwiseeffectthewaiverofaconsumer's
17righttotrialbyjury;
HCSHB2771 10 18 (8)Offerorprovidelegaladvicetotheconsumerregardingthelitigation
19financingortheunderlyingdispute;
20 (9)Assign,whichincludessecuritizing,alitigationfinancingcontractinwholeor
21part;
22 (10)Reportaconsumertoacreditreportingagencyifinsufficientfundsremain
23fromthenetproceedstorepaythelitigationfinancer;or
24 (11)Receiveorexerciseanyrighttodirect,normakeanydecisionswithrespect
25to,theconductoftheconsumer'slegalclaimoranysettlementorresolutionthereof.
26Therighttomakesuchdecisionsshallremainsolelywiththeconsumerandhisorher
27legalrepresentative.
28 2.Alegalrepresentativeretainedbyaconsumer,amedicalproviderforsuch
29consumer,oranyemployeethereofshallnothaveafinancialinterestinlitigation
30financingandshallnotreceiveareferralfeeorotherconsiderationfromanylitigation
31financer,itsemployees,itsowners,oritsaffiliates.
436.574.1.Thetermsofthelitigationfinancingagreementshallbesetforthina
2writtencontractthatiscompletelyfilledin.Thereshallbenoincompletesectionswhen
3thecontractisofferedorpresentedtotheconsumer.
4 2.Litigationfinancingcontractsshallcontainthedisclosuresspecifiedinthis
5section,whichshallconstitutematerialtermsofthelitigationfinancingcontract.
6 3.Thedisclosuresshallbetypedinatleastfourteen-pointboldfontandbe
7placedclearlyandconspicuouslyimmediatelyabovetheconsumer'ssignaturelineinthe
8litigationfinancingcontractandshallbeinsubstantiallythefollowingform:
9 Consumer'sRighttoCancellation:Youmaycancelthiscontract
10 withoutpenaltyorfurtherobligationwithinfive(5)businessdays
11 fromthedateyousignedthiscontractorreceivedfinancingfrom
12 [insertnameofthelitigationfinancer]byeitherreturningthe
13 fundsto[insertname,officeaddressandofficehoursofthe
14 litigationfinancer]orbyU.S.mail,[insertnameandmailing
15 addressoflitigationfinancer].ForreturnbyU.S.mail,the
16 postmarkdateonthereturnedfundsor,ifmailedbyregistered
17 orcertifiedmail,thedateofthereturnreceiptrequestedshallbe
18 thedateofreturn.
19 Thefeeschargedpursuanttothisagreementshallnotexceed
20 [litigationfinancertoinsertannualinterestpercentagerate,
21 percentageofawardorsettlementproceeds,ordollaramount].
HCSHB2771 11 22 Thelitigationfinanceragreesthatithasnorighttoandwillnot
23 makeanydecisionsabouttheconductofyourlawsuitordispute
24 andthattherighttomakethosedecisionsremainssolelywithyou
25 andyourlegalrepresentative.
26 Ifthereisnorecoveryofanymoneyfromyourlegalclaimorif
27 thereisnotenoughmoneytosatisfytheportionassignedto
28 [insertnameofthelitigationfinancer]infull,youwillnotowe
29 anythinginexcessofyourrecovery.
30 Donotsignthiscontractbeforeyoureaditcompletely.Ifthis
31 contractcontainsanyincompletesections,youareentitledtoa
32 completelyfilled-incopyofthecontractpriortosigningit.
33 Beforeyousignthiscontract,youshouldobtaintheadviceofan
34 attorney.Dependingonthecircumstancesyoumaywantto
35 consultataxadvisor,afinancialprofessional,oranaccountant.
36 4.Iftheconsumerisrepresentedbyalegalrepresentativeinthedisputethatis
37thesubjectofthelitigationfinancingcontract,thelegalrepresentativeshall
38acknowledgeinthecontractthatthelegalrepresentativeoritsemployeror
39employeeshaveneitherreceivednorpaidareferralfeeoranyotherconsideration
40fromortothelitigationfinancer,norwillinthefuturedoso.
41 5.Iftheconsumer'slegalrepresentativeisapartytoalitigationfinancing
42agreementrelatedtotheconsumer'slegalproceeding,thelegalrepresentativeshall
43sharewiththeconsumertheagreementbetweenthelegalrepresentativeandthe
44litigationfinancer.Theagreementshallbeaccompaniedbythedisclosurerequiredby
45thissection,andtheconsumershallsignbothanacknowledgmentthattheagreement
46hasbeenreadandtherequireddisclosure.
436.575.1.Exceptasotherwisestipulatedororderedbythecourt,aconsumer
2ortheconsumer'slegalrepresentativeshall,withoutawaitingadiscoveryrequest,
3providetoallpartiestothelitigation,includingtheconsumer'sinsurerifpriorto
4litigation,anylitigationfinancingcontractoragreementunderwhichanyone,other
5thanalegalrepresentativepermittedtochargeacontingentfeerepresentingaparty,
6hasarighttoreceivecompensationorproceedsfromtheconsumerthatarecontingent
7onandsourcedfromanyproceedsofthecivilaction,bysettlement,judgment,or
8otherwise.
HCSHB2771 12 9 2.Theexistenceoflitigationfinancingandallparticipantsinsuchfinancing
10arrangementsarepermissiblesubjectsofdiscoveryinallpersonalinjurylitigationor
11mattersarisingoutofpersonalinjuries.
436.576.1.Eachlitigationfinancershallfileareportannuallywiththesecretary
2ofstateinaccordancewithsuchproceduresasthesecretarymayrequire.Thereport
3shallcontainatleastthefollowing:
4 (1)Foreachpersonthat,directlyorindirectly,owns,controls,holdswiththe
5powertovote,orholdsproxiesrepresentingatleastfivepercentofthevotingsecurities
6ofthelitigationfinancer:
7 (a)Thelegalnameandaddressofeachperson;
8 (b)Ifthepersonisanindividual,hisorherprincipaloccupation,offices,and
9positionsheldduringthepastfiveyearsandanyconvictionofcriminaloffensesother
10thanminortrafficviolationsduringthepasttenyears;
11 (c)Ifthepersonisnotanindividual,areportofthenatureofitsbusiness
12operationsduringthepastfiveyearsortheentiretyofthepersonandanypredecessor's
13existence,whicheverisshorter,anarrativedescriptionofthebusinessintendedtobe
14donebythepersonandtheperson'ssubsidiariesandalistofallindividualswhoareor
15whohavebeenselectedtobecomedirectorsorexecutiveofficersoftheperson.Thelist
16shallincludeforeachindividualtheinformationrequiredundersubdivision(2)ofthis
17subsection;and
18 (2)Foreachlitigationfinancingtransactionenteredinthisstateorinvolvinga
19claimtobelitigatedinthisstate,thelitigationfinancershallidentify:
20 (a)Theamount,datesofpayment,andnameandaddressofeachpersonthat
21receivedanyamountoffinancingfromalitigationfinancerduringtheprevious
22calendaryear;
23 (b)Theamount,dateofpayment,andsourceofpaymentforallproceeds
24obtainedbythelitigationfinancerduringthepreviouscalendaryearfromany
25judgment,award,settlement,orverdictinalitigationfinancingtransaction;and
26 (c)Anyotherinformationthesecretaryofstatedeemsnecessarytothe
27administrationofjustice.
28 2.(1)Thesecretaryofstateshallprovidetothecommissionerofinsurancean
29annualreportwithinsixmonthsofthereceiptoftheinformationinsubsection1ofthis
30sectioncontainingalloftheinformationthereinandasummary.Thisreportasfiled
31shallnotbemadeavailabletothepublicandshallbeconfidentialbylawandprivileged,
32shallnotbesubjecttotheprovisionsofchapter610,shallnotbesubjecttosubpoena,
33andshallnotbesubjecttodiscoveryoradmissibleinevidenceinanyprivatecivilaction.
HCSHB2771 13 34 (2)Thesecretaryofstateshallreleasethereportandsummarydescribedunder
35subdivision(l)ofthissubsectiontothepublicafterremovingallpersonallyidentifiable
36informationofanyconsumer.Nothinginthissubsectionshallaffecttheobligationto
37discloselitigationfinancingcontractsorotheragreementsundersection436.575.
436.577.Sections436.571to436.580shallapplytoanyclassaction.Putative
2classmembersandthecourtshallbeadvisedthattheproposedclassattorneyhasalegal
3orfinancialrelationshipwithalitigationfinancer.
436.578.Sections436.571to436.580shallnotapplytolitigationfinancing
2providedtocommercialenterprisesinsupportoflitigationstrictlybetweencommercial
3enterprises.Thisexemptiondoesnotapplytoanypersonalinjuryclaim,situations
4arisingfromapersonalinjuryclaim,oranaggregationofpersonalinjuryclaims,
5whetherbysubrogation,assignment,oranyotherbasis.
436.579.Thepracticeoflitigationfinancingshallberegulatedbythedivisionof
2finance.Thecommissionerofthedivisionoffinancemaypromulgateallnecessaryrules
3andregulationsfortheadministrationofthissection.Anyruleorportionofarule,as
4thattermisdefinedinsection536.010,thatiscreatedundertheauthoritydelegatedin
5thissectionshallbecomeeffectiveonlyifitcomplieswithandissubjecttoallofthe
6provisionsofchapter536and,ifapplicable,section536.028.Thissectionandchapter
7536arenonseverable,andifanyofthepowersvestedwiththegeneralassembly
8pursuanttochapter536toreview,todelaytheeffectivedate,ortodisapproveandannul
9arulearesubsequentlyheldunconstitutional,thenthegrantofrulemakingauthority
10andanyruleproposedoradoptedafterAugust28,2022,shallbeinvalidandvoid.
436.580.Anyviolationoftheprovisionsofsections436.571to436.580shallmake
2thelitigationfinancingcontractunenforceablebythelitigationfinancer,theconsumer,
3oranysuccessor-in-interesttothelitigationfinancingcontract.
Section1.Itshallbeunlawfulforanypersonorentitytooperateasaconsumer
2legalfundingproviderinthisstateexceptasauthorizedbytheconsumerlegalfunding
3modelactandwithoutfirsthavingobtainedalicenseinaccordancewiththeconsumer
4legalfundingmodelact.Nopersonorentitymayengageinanydevise,subterfuge,or
5pretensetoevadetherequirementsoftheconsumerlegalfundingmodelact.However,
6anycompanythathasalicenseingoodstandingundersection436.550to436.570onthe
7effectivedateoftheconsumerlegalfundingmodelactshallbeentitledtomake
8consumerlegalfundingsunderthetermsoftheconsumerlegalfundingmodelactupon
9theeffectivedateoftheconsumerlegalfundingmodelact,ifthatcompanyfilesan
10applicationforaconsumerlegalfundinglicense,forsixtydaysoruntilthedivision
11approvesordeniestheapplicationforafundinglicense,whicheverissooner.Any
12consumerlegalfundingcontractbyanypersonorentityinviolationofthissubsection
HCSHB2771 14 13shallbenullandvoidandthepersonorentitythatenteredintotheconsumerlegal
14fundingtransactionsshallhavenorighttocollect,attempttocollect,receive,orretain
15anyprincipal,interestorchargesrelatedtotheconsumerlegalfundingtransaction.
âś”
HCSHB2771 15