2025 -- H 5907
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LC002294
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S T A T E O F R H O D E I S L A N D
IN GENERAL ASSEMBLY
JANUARY SESSION, A.D. 2025
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A N A C T
RELATING TO COURTS AND CIVIL PROCEDURE -- PROCEDURE GENERALLY --
LITIGATION LENDING AGREEMENTS
Introduced By: Representatives Potter, Baginski, Batista, Shanley, and Dawson
Date Introduced: February 28, 2025
Referred To: House Judiciary
It is enacted by the General Assembly as follows:
SECTION 1. Title 9 of the General Laws entitled "COURTS AND CIVIL PROCEDURE 1
-- PROCEDURE GENERALLY" is hereby amended by adding thereto the following chapter: 2
CHAPTER 3.1 3
LITIGATION LENDING AGREEMENTS 4
9-3.1-1. Legislative findings. 5
The general assembly finds and declares that: 6
(1) Litigation financing contracts are being entered into where companies advance money 7
to a litigant in return for payment from litigation proceeds at effective annual interest rates far 8
exceeding state usury limits; and 9
(2) These contracts often bear annual interest rates which exceed one hundred percent 10
(100%); and 11
(3) These rates are detrimental to the general welfare of the citizens of this state and it is 12
necessary to enact legislation to ensure that litigation-funding advances conform to state laws 13
governing usurious loans. 14
9-3.1-2. Litigation lending agreement defined. 15
A "litigation lending agreement" (LLA) is any agreement whereby monies are paid to 16
parties to civil litigation (litigants) in consideration for a litigant's agreement to repay these monies 17
(with or without interest, one-time charges, use fees, or any other add-on charges) from the proceeds 18
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of the litigation. Not included in the definition of an LLA are advancements of expenses of litigation 1
made by attorneys on behalf of their clients, as permitted by rule 1.8(e) of the Rhode Island rules 2
of professional conduct. 3
9-3.1-3. Litigation advances considered loans pursuant to state usury law. 4
All payments made by a litigant under an LLA greater than the amount received by the 5
litigant under the LLA shall be considered interest on loans subject to the provisions of chapter 26 6
of title 6 ("interest and usury") regardless of: 7
(1) Whether an LLA characterizes itself as a "loan," an "advance," an "investment," an 8
"assignment of proceeds," or any other characterization; 9
(2) Whether monies to be repaid under the LLA are called "interest," "use fees," or any 10
other term; 11
(3) Whether the amount received by the litigant under the LLA otherwise exceeds any 12
monetary limit for loans and interest rates falling within the provisions of chapter 26 of title 6; and 13
(4) Whether the obligation on the part of the litigant to repay monies is contingent upon a 14
particular outcome of the litigation. 15
SECTION 2. This act shall take effect upon passage. 16
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EXPLANATION
BY THE LEGISLATIVE COUNCIL
OF
A N A C T
RELATING TO COURTS AND CIVIL PROCEDURE -- PROCEDURE GENERALLY --
LITIGATION LENDING AGREEMENTS
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This act would make litigation loan agreements subject to state usury laws. 1
This act would take effect upon passage. 2
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LC002294
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