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AN ACT GENERALLY REVISING LAWS RELATING TO LITIGATION FINANCING; AMENDING THE
LITIGATION FINANCING TRANSPARENCY AND CONSUMER PROTECTION ACT; CREATING THE
FOREIGN INVESTMENT IN LITIGATION FINANCING ACT; PROVIDING A PROHIBITION ON LITIGATION
FUNDING BY CERTAIN FOREIGN ENTITIES; PROVIDING FOR REGISTRATION AND TRANSPARENCY OF
FOREIGN PERSONS; AMENDING DEFINITIONS; AMENDING SECTIONS 31-4-102, 31-4-104, 31-4-108, 31-
4-118, AND 31-4-120, MCA; AND PROVIDING AN IMMEDIATE EFFECTIVE DATE AND AN APPLICABILITY
DATE.”
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:
Section 1. Section 31-4-102, MCA, is amended to read:
"31-4-102. For the purposes of this part, the following definitions apply:
(1) "Consumer" means any individual who resides, is present, or is domiciled in this state or
person who is or may become a plaintiff, claimant, or complainant in conjunction with or in pursuit of a legal
claim a civil action or an administrative proceeding or in pursuit of any claim or cause of action in this state.
(2) "Entity" means any domestic or foreign corporation, partnership, limited partnership, limited
liability company, trust, fund, plan, or any other business, enterprise, association, or organization of any kind or
nature.
(3) "Legal claim" means a civil action, administrative proceeding, claim, or cause of action to
recover damages or any form of monetary or injunctive relief in this state.
(3)(4) "Legal representative" means any an attorney, or group of attorneys, or law firm or group of law
firms duly licensed and authorized to practice law and engaged to represent a consumer in conjunction with or
in pursuit of a legal claim a civil action, administrative proceeding, or claim to recover damages in this state.
(4)(5) (a) "Litigation financer" means any person or group of persons engaged in, or formed, ****
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created, or established for the purpose of engaging in, the business of litigation financing or any other business
or economic activity in which a person or group of persons receive consideration of any kind in exchange for
providing litigation financing.
(b) The term does not include:
(i) a party to the legal claim;
(ii) a legal representative engaged directly, or indirectly through another legal representative, to
represent a party in conjunction with or in pursuit of the legal claim; or
(iii) an entity or insurer with a preexisting contractual obligation to indemnify or defend a party to a
legal claim.
(5)(6) "Litigation financing" means:
(a) the financing, funding, advancing, or loaning of money to a legal representative or to any
person who has or may pursue or assert a legal claim or who is or may become a plaintiff in conjunction with or
in pursuit of a legal claim if:
(i) repayment of all or a portion of the amount financed, funded, advanced, or loaned is contingent
in any respect on the outcome of a legal claim or group of legal claims;
(ii) repayment is required only if the person prevails in conjunction with or in pursuit of a legal
claim; or
(iii) the money or funds for the repayment of any amount of the financing, funding, advance, or loan
is derived or sourced, directly or indirectly, from the proceeds of or other consideration realized from a
judgment, award, settlement, verdict, or other form of monetary relief the person or legal representative may
receive or recover in conjunction with or in pursuit of a legal claim or group of legal claims; or to pay for fees,
costs, expenses, or any other sums arising from or in any manner related to a civil action, administrative
proceeding, claim, or cause of action, if the financing, funding, advancing, or loaning of money is provided by
any person other than a person who is:
(a) a party to the civil action, administrative proceeding, claim, or cause of action;
(b) a legal representative engaged, directly or indirectly through another legal representative, to
represent a party in the civil action, administrative proceeding, claim, or cause of action; or
(c) an entity or insurer with a preexisting contractual obligation to indemnify or defend a party to ****
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the civil action, administrative proceeding, claim, or cause of action
(b) any agreement or arrangement involving the financing, funding, advancing, or loaning of
money to a legal representative if the repayment of all or a portion of the amount financed, funded, advanced,
or loaned is contingent on the outcome of any single legal claim or group of legal claims in which the legal
representative represents one or more consumers.
(6)(7) (a) "Litigation financing contract" means a written contract in which a person agrees to provide
litigation financing to any person in conjunction with a civil action or an administrative proceeding or in pursuit of
any claim or cause of action in this state in consideration for:
(i) the payment of interest, fees, or other consideration to the person providing the litigation
financing; or
(ii) granting or assigning to the person providing the litigation financing a right to receive payment
from the value of any proceeds or other consideration realized from any judgment, award, settlement, verdict,
or other form of monetary relief any consumer, legal representative, or other person may receive or recover in
relation to the legal claim civil action, administrative proceeding, claim, or cause of action.
(b) The term includes an agreement related to a litigation financing contract.
(b)(c) The term does not include any agreement, contract, or engagement of a legal representative to
render legal services to a consumer on a contingency fee basis, including the advancement of legal costs by
the legal representative, in which the services or costs are provided to or on behalf of a consumer by the legal
representative representing the consumer in the legal claim civil action, administrative proceeding, claim, or
cause of action.
(7)(8) "Person" means includes an individual and or an entity.
(9) "Proprietary information" means any documents, records, or information received by a party in
conjunction with or in pursuit of a legal claim that has economic or commercial value in any person’s business
and is:
(a) designated as proprietary information by a party to the legal claim; or
(b) subject to a court order to protect, seal, or otherwise restrict the disclosure or sharing of the
documents, records, or information.
(8)(10) "Regulated lender" has the same meaning as in 31-1-111. ****
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(9)(11) "Secretary" means the secretary of state provided for in Title 2, chapter 15, part 4."
Section 2. Section 31-4-104, MCA, is amended to read:
"31-4-104. (1) A litigation financer may not:
(a) pay or offer commissions, referral fees, rebates, or other forms of consideration to any person
in exchange for referring a consumer to a litigation financer;
(b) accept any commissions, referral fees, rebates, or other forms of consideration from any
person providing any goods or rendering any services to the consumer;
(c) charge a rate of interest that exceeds that the rate of interest allowed under 31-1-107;
(d) receive or recover any payment that exceeds 25% of the amount of any judgment, award,
settlement, verdict, or other form of monetary relief obtained in the civil action, administrative proceeding, claim,
or cause of action that is the subject of the litigation contract;
(e) advertise false or misleading information regarding its products or services;
(f) refer or require any consumer to hire or engage any person providing any goods or rendering
any services to the consumer;
(g) fail to promptly deliver a fully completed and signed litigation financing contract to the consumer
and the consumer's legal representative;
(h) attempt to secure a remedy or obtain a waiver of any remedy, including but not limited to
compensatory, statutory, or punitive damages, that the consumer may or may not be entitled to pursue or
recover otherwise;
(i) offer or provide legal advice to the consumer;
(j) assign, including securitizing, a litigation financing contract in whole or in part;
(k) report a consumer to a credit reporting agency if insufficient funds remain to repay the litigation
financer in full from the proceeds received from any judgment, award, settlement, verdict, or other form of
monetary relief obtained in the civil action, administrative proceeding, claim, or cause of action that is the
subject of the litigation financing contract; and
(l) make a decision, influence, or direct a decision regarding a legal claim to recover damages
including decisions in appointing or changing counsel, choice or use of expert witnesses, litigation strategy, and ****
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settlement or other resolution; or
(l)(m) demand, request, receive, or exercise any right to influence, affect, or otherwise make any
decision in the handling, conduct, administration, litigation, settlement, or resolution of any civil action,
administrative proceeding, claim, or cause of action in which the litigation financer has provided litigation
financing. All rights remain solely with the consumer and the consumer's legal representative.
(2) A person who provides any goods or renders any services to the consumer may not have a
financial interest in litigation financing and may not receive any commissions, referral fees, rebates, or other
forms of consideration from any litigation financer or the litigation financer's employees, owners, or affiliates.
(3) A party, attorney or law firm representing a party, or affiliated attorney or law firm may not
disclose or share any information with a litigation financer that is subject to a protective or sealing order from a
court.
(4) A party to a legal claim may not disclose to or share with a litigation financer any proprietary
information received in the course of or in conjunction with a legal claim."
Section 3. Section 31-4-108, MCA, is amended to read:
"31-4-108.
stipulated or ordered by a court of competent jurisdiction, a consumer or the consumer's legal representative or
a party or a party's legal representative shall, without awaiting a discovery request, disclose and deliver to the
following persons the litigation financing contract:
(a) each party to the civil action, administrative proceeding, claim, or cause of action, or to each
party's legal representative;
(b) the court, agency, or tribunal in which the civil action, administrative proceeding, claim, or
cause of action may be pending; and
(c) any known person, including an insurer, with a preexisting contractual obligation to indemnify or
defend a party to the civil action, administrative proceeding, claim, or cause of action.
(2) The disclosure obligation under subsection (1) exists regardless of whether a civil action or an
administrative proceeding has commenced.
(3) The disclosure obligation under subsection (1) is a continuing obligation, and within 30 days of ****
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entering into a litigation financing contract or amending an existing litigation financing contract, the consumer or
the consumer's legal representative or a party or a party's legal representative shall disclose and deliver any
new or amended litigation financing contracts.
(4) The existence of the litigation financing contract and all participants or parties to a litigation
financing contract are permissible subjects of discovery in any civil action, administrative proceeding, claim, or
cause of action to which litigation financing is provided under the litigation financing contract, regardless of
whether a civil action or an administrative proceeding has commenced."
Section 4. Section 31-4-118, MCA, is amended to read:
"31-4-118. This part does not apply to the following:
(1) a nonprofit entity that is exempt from federal income taxation under section 501(c)(3) of the
Internal Revenue Code or a nonprofit entity that provides litigation financing, directly or indirectly, for the benefit
of the nonprofit or one or more of its members without receiving funding, or money to a legal representative to
represent a consumer on a pro bono basis, provided that the nonprofit entity does not receive, in consideration
for the litigation financing:
(a) the payment of interest, fees, or other consideration in excess of the amount of attorney fees
and litigation expenses incurred in conjunction with or in pursuit of the legal claim; or
(b) except for in-house counsel of the nonprofit, any right to recovery or payment from the amount
of any judgment, award, settlement, verdict, or other form of monetary relief obtained in the civil action,
administrative proceeding, claim, or cause of action;
(2) any litigation financing provided by an entity engaged in commerce or business activity, but
only if the entity does not:
(a) charge or collect any interest, fees, or other consideration;
(b) retain or receive any financial interest in the outcome of the legal claim civil action,
administrative proceeding, claim, or cause of action; or
(c) receive any right to recovery or payment from the amount of any judgment, award, settlement,
verdict, or other form of monetary relief obtained in conjunction with or in pursuit of the legal claimthe civil
action, administrative proceeding, claim, or cause of action; or ****
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(3) a regulated lender that does not receive, in consideration for loaning money to any person, a
right to receive payment from the value of any proceeds or other consideration realized from any judgment
award, settlement, verdict, or other form of monetary relief any person may receive or recover in conjunction
with or in pursuit of the legal claim relation to any civil action, administrative proceeding, claim, or cause of
action."
Section 5. Section 31-4-120, MCA, is amended to read:
"31-4-120.
any award or order imposing or assessing costs or monetary sanctions against a consumer or a party's legal
representative arising from or relating to any civil action, administrative proceeding, claim, or cause of action for
which the litigation financer is providing litigation financing."
Section 6. [Sections 6 through 11] may be cited as the “Foreign Investment in Litigation
Financing Act”.
Section 7. The definitions set forth in 31-4-102 apply for purposes of [sections 6 through
11]. In addition, the following definitions apply for purposes of [sections 6 through 11]:
(1) “Foreign adversary” means:
(a) a foreign government of a foreign country identified or designated as a foreign adversary
pursuant to 15 CFR 791.4, as in effect on [the effective date of this act];
(b) any political subdivision, agency, department, or political party of a foreign government
identified in subsection (1)(a); or
(c) a foreign nongovernment person identified or designated by the United States secretary of
commerce as a foreign adversary pursuant to 15 CFR 791.4, as in effect on [the effective date of this act].
(2) “Foreign person” means:
(a) an individual who is not a citizen of the United States or is not an alien lawfully admitted for
permanent residence in the United States;
(b) an entity that is not formed, organized, incorporated, or created in the United States; ****
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(c) an entity of which a majority of the persons who own or control the entity are not citizens of the
United States or are not aliens lawfully admitted for permanent residence in the United States;
(d) the government, a political subdivision, agency, department, or a political party of a country
other than the United States;
(e) an entity that has a place of business in a country other than the United States and that has
shares or other ownership interest held by the government or a government official of a country other than the
United States; and
(f) an employee, officer, director, official, or member of an entity described in this subsection (2).
(3) “Foreign person of concern” means a person that:
(a) is formed, organized, incorporated, or created in a foreign country identified as a foreign
adversary;
(b) is formed, organized, incorporated, owned, controlled, or affiliated, directly or indirectly, with a
foreign adversary;
(c) maintains a personal residence or place of business in a foreign country identified as a foreign
adversary; or
(d) is formed, organized, incorporated, owned, controlled, or affiliated, directly or indirectly, with a
foreign person that has been:
(i) placed on the federal office of foreign assets control's specially designated nationals and
blocked persons list, also known as the SDN list, as amended; or
(ii) designated by the United States secretary of state as a foreign terrorist person or organization.
Section 8.
concern. (1) A foreign adversary or a foreign person of concern may not engage in litigation financing in this
state.
(2) A foreign adversary or a foreign person of concern may not, directly or indirectly, invest in,
finance, fund, or loan money to a litigation financer engaged in litigation financing in this state.
(3) A litigation financer engaged in litigation financing in this state may not, directly or indirectly:
(a) become affiliated with or maintain an affiliation with a foreign adversary or a foreign person of ****
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concern;
(b) receive or accept money or funds from a foreign adversary or a foreign person of concern; or
(c) allow a foreign adversary or a foreign person of concern to invest in, maintain an ownership
interest in, or exercise any control over the litigation financer.
Section 9. A party to a civil action or
administrative proceeding in this state may not disclose to or share with a foreign person, a foreign adversary,
or a foreign person of concern any proprietary information received in conjunction with or in pursuit of a legal
claim in this state.
Section 10. (1) A foreign person is prohibited from
engaging in the activities set forth in subsection (2) if the foreign person directly or indirectly:
(a) engages in litigation financing;
(b) becomes affiliated with or maintains an affiliation with a litigation financer;
(c) finances, funds, or loans money to a litigation financer; or
(d) invests in, maintains an ownership interest in, or exercises any control over a litigation financer.
(2) A foreign person that engages in the activities set forth in subsection (1) may not:
(a) become affiliated with or maintain an affiliation with a foreign adversary or a foreign person of
concern;
(b) receive or accept money or funds from a foreign adversary or a foreign person of concern; or
(c) allow a foreign adversary or a foreign person of concern to invest in, maintain an ownership
interest in, or exercise any control over the foreign person.
Section 11. (1) A foreign person who is
qualified to engage in litigation financing in this state shall comply with this chapter if the foreign person
engages in litigation financing in this state.
(2) A litigation financer shall disclose in writing to the secretary of state the information set forth in
subsection (3) if the litigation financer engages in any of the following: ****
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(a) becomes affiliated with or maintains an affiliation with a foreign person;
(b) receives or accepts money or funds from a foreign person for any purpose; or
(c) allows a foreign person to invest in, maintain an ownership interest in, or exercise any control
over the litigation financer.
(3) The following information must be disclosed in writing to the secretary of state:
(a) the name and address of the foreign person and the citizenship of the foreign person or the
country of incorporation, formation, or registration of the foreign person; and
(b) a copy of each litigation financing contract in which the foreign person is entitled to receive any
payment under the contract.
(4) The litigation financer shall provide the written notice and the information disclosure required by
under this section subsection (2) within 30 days after the date on which any a litigation financing agreement is
executed by the consumer.
Section 12. [Sections 6 through 11] are intended to be codified as a new
part in Title 31, chapter 4, and the provisions of Title 31, chapter 4, apply to [sections 6 through 11].
Section 13. If a part of [this act] is invalid, all valid parts that are severable from the
invalid part remain in effect. If a part of [this act] is invalid in one or more of its applications, the part remains in
effect in all valid applications that are severable from the invalid applications.
Section 14. [This act] is effective on passage and approval.
Section 15. [This act] applies to litigation financing contracts entered into on or after
[the effective date of this act].
- END - I hereby certify that the within bill,
SB 511, originated in the Senate.
___________________________________________
Secretary of the Senate
___________________________________________
President of the Senate
Signed this _______________________________day
of____________________________________, 2025.
___________________________________________
Speaker of the House
Signed this _______________________________day
of____________________________________, 2025. SENATE BILL NO. 511
INTRODUCED BY G. HERTZ
AN ACT GENERALLY REVISING LAWS RELATING TO LITIGATION FINANCING; AMENDING THE
LITIGATION FINANCING TRANSPARENCY AND CONSUMER PROTECTION ACT; CREATING THE
FOREIGN INVESTMENT IN LITIGATION FINANCING ACT; PROVIDING A PROHIBITION ON LITIGATION
FUNDING BY CERTAIN FOREIGN ENTITIES; PROVIDING FOR REGISTRATION AND TRANSPARENCY OF
FOREIGN PERSONS; AMENDING DEFINITIONS; AMENDING SECTIONS 31-4-102, 31-4-104, 31-4-108, 31-
4-118, AND 31-4-120, MCA; AND PROVIDING AN IMMEDIATE EFFECTIVE DATE AND AN APPLICABILITY
DATE.”