Rhode Island 2025 Regular Session

Rhode Island House Bill H5907 Compare Versions

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

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7	7	LC002294
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9	9	S T A T E O F R H O D E I S L A N D
10	10	IN GENERAL ASSEMBLY
11	11	JANUARY SESSION, A.D. 2025
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13	13
14	14	A N A C T
15	15	RELATING TO COURTS AND CIVIL PROCEDURE -- PROCEDURE GENERALLY --
16	16	LITIGATION LENDING AGREEMENTS
17	17	Introduced By: Representatives Potter, Baginski, Batista, Shanley, and Dawson
18	18	Date Introduced: February 28, 2025
19	19	Referred To: House Judiciary
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22	22	It is enacted by the General Assembly as follows:
23	23	SECTION 1. Title 9 of the General Laws entitled "COURTS AND CIVIL PROCEDURE 1
24	24	-- PROCEDURE GENERALLY" is hereby amended by adding thereto the following chapter: 2
25	25	CHAPTER 3.1 3
26	26	LITIGATION LENDING AGREEMENTS 4
27	27	9-3.1-1. Legislative findings. 5
28	28	The general assembly finds and declares that: 6
29	29	(1) Litigation financing contracts are being entered into where companies advance money 7
30	30	to a litigant in return for payment from litigation proceeds at effective annual interest rates far 8
31	31	exceeding state usury limits; and 9
32	32	(2) These contracts often bear annual interest rates which exceed one hundred percent 10
33	33	(100%); and 11
34	34	(3) These rates are detrimental to the general welfare of the citizens of this state and it is 12
35	35	necessary to enact legislation to ensure that litigation-funding advances conform to state laws 13
36	36	governing usurious loans. 14
37	37	9-3.1-2. Litigation lending agreement defined. 15
38	38	A "litigation lending agreement" (LLA) is any agreement whereby monies are paid to 16
39	39	parties to civil litigation (litigants) in consideration for a litigant's agreement to repay these monies 17
40	40	(with or without interest, one-time charges, use fees, or any other add-on charges) from the proceeds 18
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43	43	LC002294 - Page 2 of 3
44	44	of the litigation. Not included in the definition of an LLA are advancements of expenses of litigation 1
45	45	made by attorneys on behalf of their clients, as permitted by rule 1.8(e) of the Rhode Island rules 2
46	46	of professional conduct. 3
47	47	9-3.1-3. Litigation advances considered loans pursuant to state usury law. 4
48	48	All payments made by a litigant under an LLA greater than the amount received by the 5
49	49	litigant under the LLA shall be considered interest on loans subject to the provisions of chapter 26 6
50	50	of title 6 ("interest and usury") regardless of: 7
51	51	(1) Whether an LLA characterizes itself as a "loan," an "advance," an "investment," an 8
52	52	"assignment of proceeds," or any other characterization; 9
53	53	(2) Whether monies to be repaid under the LLA are called "interest," "use fees," or any 10
54	54	other term; 11
55	55	(3) Whether the amount received by the litigant under the LLA otherwise exceeds any 12
56	56	monetary limit for loans and interest rates falling within the provisions of chapter 26 of title 6; and 13
57	57	(4) Whether the obligation on the part of the litigant to repay monies is contingent upon a 14
58	58	particular outcome of the litigation. 15
59	59	SECTION 2. This act shall take effect upon passage. 16
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66	66	EXPLANATION
67	67	BY THE LEGISLATIVE COUNCIL
68	68	OF
69	69	A N A C T
70	70	RELATING TO COURTS AND CIVIL PROCEDURE -- PROCEDURE GENERALLY --
71	71	LITIGATION LENDING AGREEMENTS
72	72	***
73	73	This act would make litigation loan agreements subject to state usury laws. 1
74	74	This act would take effect upon passage. 2
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