South Dakota 2025 Regular Session

South Dakota Senate Bill SB175 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New		Differences
1		-	25.361.22 100th Legislative Session 175
	1	+	25.361.21 100th Legislative Session 175
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4	4		2025 South Dakota Legislature
5	5		Senate Bill 175
6		-	~~HOUSE JUDICIARY~~ ENGROSSED
	6	+	SENATE ENGROSSED
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9	9
10	10
11	11
12	12		Introduced by: Senator Wheeler
13	13
14	14		Underscores indicate new language.
15	15		Overstrikes indicate deleted language.
16	16		An Act to create provisions governing litigation financing. 1
17	17		BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF SOUTH DAKOTA: 2
18	18		Section 1. That a NEW SECTION be added to a NEW CHAPTER in title 54: 3
19	19		Terms used in this Act mean: 4
20	20		(1) "Consumer," any individual who resides or is present in this state or who is or may 5
21	21		become a claimant or a plaintiff in a civil action or an administrative proceeding, 6
22	22		or in pursuit of any claim or cause of action in this state; 7
23	23		(2) "Division," the Division of Banking; 8
24	24		(3) "Entity," any domestic or foreign corporation, partnership, limited partnership, 9
25	25		limited liability company, trust, fund, plan, or any other business, enterprise, 10
26	26		association, or organization; 11
27	27		(4) "Foreign country of concern," a foreign government listed in 15 C.F.R. § 791.4 12
28	28		(January 1, 2025); 13
29	29		(5) "Foreign entity of concern," an association, corporation, organization, partnership, 14
30	30		or other combination of persons: 15
31	31		(a) Organized or incorporated in a foreign country of concern; 16
32	32		(b) Owned or controlled by the government, a political subdivision, or a political 17
33	33		party of a foreign country of concern; 18
34	34		(c) That has a principal place of business in a foreign country of concern; or 19
35	35		(d) Owned, organized, or controlled by or affiliated with a foreign organization 20
36	36		that has been placed on the federal Office of Foreign Assets Control specially 21
37	37		designated nationals and blocked persons list or designated by the United 22
38	38		States Secretary of State as a foreign terrorist organization; 23
39	39		(6) "Legal representative," an attorney, group of attorneys, or law firm duly licensed 24
40	40		and authorized to practice law and to represent a consumer in a civil action, 25
41		-	administrative proceeding, or claim to recover damages in this state; 26 25.361.22 2 175
	41	+	administrative proceeding, or claim to recover damages in this state; 26 25.361.21 2 175
42	42		Underscores indicate new language.
43	43		Overstrikes indicate deleted language.
44	44		(7) "Litigation financer," any individual or entity engaged in, or any entity formed, 1
45	45		created, or established for the purpose of engaging in, the business of litigation 2
46	46		financing or any other business or economic activity in which a person receives 3
47	47		consideration of any kind in exchange for providing litigation financing. A litigation 4
48	48		financer does not include a state or federally charted bank or credit union; 5
49	49		(8) "Litigation financing," the financing, funding, advancing, or loaning of money to 6
50	50		pay for fees, costs, expenses, or any other sums arising from or in any manner 7
51	51		related to a civil action, administrative proceeding, claim, or cause of action, if the 8
52	52		financing, funding, advancing, or loaning of money is provided by any person other 9
53	53		than a person who is: 10
54	54		(a) A party to the civil action, administrative proceeding, claim, or cause of 11
55	55		action; 12
56	56		(b) A legal representative engaged, directly or indirectly through another legal 13
57	57		representative, to represent a party in the civil action, administrative 14
58	58		proceeding, claim, or cause of action; or 15
59	59		(c) An entity or insurer with a preexisting contractual obligation to indemnify 16
60	60		or defend a party to the civil action, administrative proceeding, claim, or 17
61	61		cause of action; 18
62	62		(9) "Litigation financing contract," a written contract in which a person agrees to 19
63	63		provide litigation financing to any person in conjunction with a civil action, 20
64	64		administrative action, claim, or cause of action in this state in consideration for: 21
65	65		(a) The payment of interest, fees, or other consideration to the person 22
66	66		providing the litigation financing; or 23
67	67		(b) Granting or assigning to the person providing the litigation financing a right 24
68	68		to receive payment from the value of any proceeds or other consideration 25
69	69		realized from any judgment, award, settlement, verdict, or other form of 26
70	70		monetary relief any consumer, legal representative, or other person may 27
71	71		receive or recover in relation to the civil action, administrative proceeding, 28
72	72		claim, or cause of action. 29
73	73		The term does not include any contract or engagement of a legal 30
74	74		representative to render legal services to a consumer on a contingency fee basis 31
75	75		or the advancement of legal costs by the legal representative, in which the services 32
76	76		or costs are provided to or on behalf of a consumer by the legal representative 33
77	77		representing the consumer in the civil action, administrative proceeding, claim, or 34
78		-	cause of action; and 35 25.361.22 3 175
	78	+	cause of action; and 35 25.361.21 3 175
79	79		Underscores indicate new language.
80	80		Overstrikes indicate deleted language.
81	81		(10) "Regulated lender," as defined in § 54-3-14. 1
82	82		Section 2. That a NEW SECTION be added to a NEW CHAPTER in title 54: 2
83	83		A person may not engage in litigation financing in this state unless the person is 3
84	84		licensed as a money lender, as provided for in chapter 54-4. 4
85	85		Section 3. That a NEW SECTION be added to a NEW CHAPTER in title 54: 5
86	86		An entity seeking to conduct business as a litigation financier must: 6
87	87		(1) Be active and in good standing, pursuant to § 47-1A-128, as reflected in the Office 7
88	88		of the Secretary of State; and 8
89	89		(2) Be authorized to engage in the business of litigation finance and designated as a 9
90	90		litigation financier in the entity's articles of incorporation, charter, articles of 10
91	91		organization, certificate of limited partnership, or other governing document. 11
92	92		Section 4. That a NEW SECTION be added to a NEW CHAPTER in title 54: 12
93	93		An entity seeking to conduct business as a litigation financer must be licensed 13
94	94		pursuant to chapter 54-4. In addition to the information required pursuant to § 54-4-40, 14
95	95		the entity's application must include a statement containing: 15
96	96		(1) For each individual who, directly or indirectly, owns, controls, holds with the power 16
97	97		to vote, or holds proxies representing five percent or more of the voting securities 17
98	98		of the litigation financer: 18
99	99		(a) The individual's legal name; 19
100	100		(b) The individual's physical street address and mailing address; 20
101	101		(c) The individual's occupation; 21
102	102		(d) Any offices and positions held with the litigation financer during the past 22
103	103		five years; and 23
104	104		(e) Any conviction of a crime other than a misdemeanor traffic violation during 24
105	105		the past ten years; 25
106	106		(2) For each entity that, directly or indirectly, owns, controls, holds with the power to 26
107	107		vote, or holds proxies representing five percent or more of the voting securities of 27
108	108		the litigation financer: 28
109	109		(a) The entity's legal name; 29
110		-	(b) The entity's physical street address and mailing address; and 30 25.361.22 4 175
	110	+	(b) The entity's physical street address and mailing address; and 30 25.361.21 4 175
111	111		Underscores indicate new language.
112	112		Overstrikes indicate deleted language.
113	113		(c) The nature of the entity's business operations, if any, during the past five 1
114	114		years or a description of the business intended to be done by the entity and 2
115	115		entity's subsidiaries, if any; and 3
116	116		(3) The names of the individuals who are or who have been selected to become 4
117	117		directors or officers of the entity and each subsidiary of the entity. 5
118	118		The information required pursuant to subdivision (1) of this section must be 6
119	119		included for each individual. 7
120	120		Section 5. That a NEW SECTION be added to a NEW CHAPTER in title 54: 8
121	121		All documents and information filed with the division pursuant to section 4 of this 9
122	122		Act are public records. 10
123	123		Section 6. That a NEW SECTION be added to a NEW CHAPTER in title 54: 11
124	124		A litigation financer may not: 12
125	125		(1) Pay or offer commissions, referral fees, rebates, or other forms of consideration to 13
126	126		any person in exchange for referring a consumer to a litigation financer; 14
127	127		(2) Accept any commissions, referral fees, rebates, or other forms of consideration 15
128	128		from any person providing any goods or rendering any service to the consumer; 16
129	129		(3) Receive or recover any payment that exceeds twenty -five percent of the amount 17
130	130		of any judgment, award, settlement, verdict, or other form of monetary relief 18
131	131		obtained in the civil action, administrative proceeding, claim, or cause of action 19
132	132		that is the subject of the litigation financing contract; 20
133	133		(4) Advertise false or misleading information regarding the litigation financer's 21
134	134		products or services; 22
135	135		(5) Refer or require any consumer to hire or engage any person providing any goods 23
136	136		or rendering any services; 24
137	137		(6) Fail to promptly deliver a completed and signed litigation financing contract to the 25
138	138		consumer and the consumer's legal representative; 26
139	139		(7) Attempt to secure a remedy or obtain a waiver of any remedy, compensatory 27
140	140		damages, punitive damages, or statutory damages that the consumer may or may 28
141	141		not be entitled to pursue or recover otherwise; 29
142	142		(8) Offer or provide legal advice to the consumer; 30
143	143		(9) Assign or secure a litigation financing contract in whole or in part; 31
144	144		(10) Report a consumer to a credit reporting agency if insufficient funds remain to repay 32
145		-	the litigation financer in full from the proceeds received from any judgment, award, 33 25.361.22 5 175
	145	+	the litigation financer in full from the proceeds received from any judgment, award, 33 25.361.21 5 175
146	146		Underscores indicate new language.
147	147		Overstrikes indicate deleted language.
148	148		settlement, verdict, or other form of monetary relief obtained in the civil action, 1
149	149		administrative proceeding, claim, or cause of action that is the subject of the 2
150	150		litigation financing contract; 3
151	151		(11) Demand, request, receive, or exercise any right to influence, affect, or otherwise 4
152	152		make any decision in the handling, conduct, administration, litigation, settlement, 5
153	153		or resolution of any civil action, administrative proceeding, claim, or cause of action 6
154	154		in which the litigation financer has provided litigation financing. All rights remain 7
155	155		solely with the consumer and the consumer's legal representative; 8
156	156		(12) Knowingly enter into an agreement creating a right for anyone, other than the 9
157	157		named parties or the legal representative of record, to receive or make any 10
158	158		payment that is contingent on the outcome of a claim or cause of action, the terms 11
159	159		of which are to be satisfied by funds directly sourced, in whole or in part, from a 12
160	160		foreign entity of concern; or 13
161	161		(13) Enter into a commercial litigation financing contract, directly or indirectly, with a 14
162	162		foreign entity of concern or a foreign country of concern. 15
163	163		Any action arising out of a violation of this section must be brought in a court of 16
164	164		competent jurisdiction. 17
165	165		Section 7. That a NEW SECTION be added to a NEW CHAPTER in title 54: 18
166	166		A person who provides any goods or renders any services to the consumer may 19
167	167		not have a financial interest in litigation financing and may not receive any commissions, 20
168	168		referral fees, rebates, or other forms of consideration from any litigation financer or the 21
169	169		litigation financer's employees, owners, or affiliates. 22
170	170		Section 8. That a NEW SECTION be added to a NEW CHAPTER in title 54: 23
171	171		The terms and conditions of a litigation financing contract must be set forth in a 24
172	172		written contract. The contract must contain all terms and conditions at the time the 25
173	173		contract is signed by any party to the contract. 26
174	174		On execution of a litigation financing contract, a litigation financer may not amend 27
175	175		the terms or conditions of the litigation financing contract without full disclosure to and 28
176	176		the prior written consent of all parties to the litigation financing contract. 29
177	177		A litigation financing contract must set forth the name, physical street address, 30
178	178		and mailing address of the litigation financer on the first page. 31
179		-	Section 9. That a NEW SECTION be added to a NEW CHAPTER in title 54: 32 25.361.22 6 175
	179	+	Section 9. That a NEW SECTION be added to a NEW CHAPTER in title 54: 32 25.361.21 6 175
180	180		Underscores indicate new language.
181	181		Overstrikes indicate deleted language.
182	182		A litigation financing contract must contain the following disclosures that constitute 1
183	183		material terms and conditions of the litigation financing contract, typed in at least 2
184	184		fourteen-point bold font, and placed clearly and conspicuously immediately above the 3
185	185		consumer's signature line in the litigation financing contract: 4
186	186		"IMPORTANT DISCLOSURES -- PLEASE READ CAREFULLY 5
187	187		(1) Right to Cancellation: You may cancel this litigation financing contract without 6
188	188		penalty or further obligation within five business days from the date you sign this 7
189	189		contract or the date you receive financing from the litigation financer, whichever 8
190	190		date is later. You may cancel by sending a notice of cancellation to the litigation 9
191	191		financer and returning to the litigation financer any funds received from the 10
192	192		litigation financer at the litigation financer's address set forth on the first page of 11
193	193		this contract. 12
194	194		(2) The maximum amount the litigation financer may receive or recover from any 13
195	195		payment may not exceed twenty -five percent of the amount of any judgment, 14
196	196		award, settlement, verdict, or other form of monetary relief obtained in the civil 15
197	197		action, administrative proceeding, claim, or cause of action that is the subject of 16
198	198		this litigation contract. 17
199	199		(3) The litigation financer agrees that it has no right to, and will not demand, request, 18
200	200		receive, or exercise any right to influence, affect, or otherwise make any decision 19
201	201		in the handling, conduct, administration, litigation, settlement, or resolution of your 20
202	202		civil action, administrative proceeding, claim, or cause of action. All of these rights 21
203	203		remain solely with you and your legal representative. 22
204	204		(4) If there is no recovery of any money from your civil action, administrative 23
205	205		proceeding, claim, or cause of action, or if there is not enough money to satisfy in 24
206	206		full the portion assigned to the litigation financer, you will not owe anything in 25
207	207		excess of your recovery. 26
208	208		(5) You are entitled to a fully completed contract with no terms or conditions omitted 27
209	209		prior to signing. Before signing this contract, you should read the contract 28
210	210		completely and consult an attorney." 29
211	211		The litigation financing contract must also include the disclosures required pursuant 30
212	212		to § 54-4-58. 31
213	213		Section 10. That a NEW SECTION be added to a NEW CHAPTER in title 54: 32
214	214		If the consumer is represented by a legal representative in the civil action, 33
215		-	administrative proceeding, claim, or cause of action that is the subject of the litigation 34 25.361.22 7 175
	215	+	administrative proceeding, claim, or cause of action that is the subject of the litigation 34 25.361.21 7 175
216	216		Underscores indicate new language.
217	217		Overstrikes indicate deleted language.
218	218		financing contract, the legal representative must acknowledge in the contract that the 1
219	219		legal representative and the legal representative's employer and employees have not 2
220	220		received or paid a referral fee or any other consideration from or to the litigation financer 3
221	221		and have no obligation to do so in the future. 4
222	222		If the consumer's legal representative is a party to a litigation financing contract 5
223	223		related to the consumer's civil action, administrative proceeding, claim, or cause of action 6
224	224		that is the subject of the litigation financing contract, the legal representative must 7
225	225		disclose and deliver the litigation financing contract to the consumer. 8
226	226		Following the disclosure and delivery, the consumer shall sign an acknowledgement 9
227	227		that the consumer has read and understands the terms and conditions of the litigation 10
228	228		financing contract. The consumer must be provided with a copy of the acknowledgement. 11
229	229		Section 11. That a NEW SECTION be added to a NEW CHAPTER in title 54: 12
230	230		Except as otherwise stipulated or ordered by a court of competent jurisdiction or 13
231		-	an administrative law judge, a legal representative ~~for a corporation~~, ~~limited liability~~ 14
232		-	~~company, partnership, or trust shall,~~ without awaiting a discovery request, disclose the 15
233		-	~~litigation financing contract~~ to: 16
234		-	~~(1) Each party to the civil action or administrative proceeding, or to each party's legal~~ 17
235		-	~~representative; and~~ 18
236		-	~~(2) Any known person with~~ a ~~preexisting contractual obligation~~ to ~~indemnify~~ or ~~defend~~ 19
237		-	a ~~party to the~~ civil action or administrative proceeding. 20
238		-	~~The disclosure obligation arises when~~ a ~~civil action~~ or an administrative ~~proceeding~~ 21
239		-	is ~~filed in~~ a ~~court of competent jurisdiction or with an administrative agency.~~ 22
240		-	~~After filing,~~ ~~the disclosure obligation is~~ a ~~continuing obligation,~~ ~~and within thirty~~ 23
241		-	~~days of entering into a litigation~~ financing contract or ~~amending an existing litigation~~ 24
242		-	financing contract, the ~~consumer or the consumer's legal representative shall disclose any~~ 25
243		-	~~new or amended~~ litigation financing contract ~~to the~~ parties ~~specified in this section.~~ 26
244		-	~~The existence of the~~ litigation financing contract ~~and all participants~~ or ~~parties to a~~ 27
245		-	litigation financing contract ~~are permissible subjects of discovery in any civil action or~~ 28
246		-	administrative proceeding ~~for which litigation financing is provided to a corporation,~~ 29
247		-	~~limited liability company, partnership, or trust under the contract, after~~ a ~~civil action or an~~ 30
248		-	~~administrative proceeding has been filed.~~ 31
249		-	~~Section 12.~~ ~~That a NEW SECTION be added to a NEW CHAPTER~~ in ~~title 54:~~ 32
250		-	~~This Act~~ does not ~~apply to~~: 33 25.361.22 8 175
	231	+	an administrative law judge, a consumer or the consumer's legal representative shall, 14
	232	+	without awaiting a discovery request, disclose the litigation financing contract to: 15
	233	+	(1) Each party to the civil action or administrative proceeding, or to each party's legal 16
	234	+	representative; and 17
	235	+	(2) Any known person with a preexisting contractual obligation to indemnify or defend 18
	236	+	a party to the civil action or administrative proceeding. 19
	237	+	The disclosure obligation arises when a civil action or an administrative proceeding 20
	238	+	is filed in a court of competent jurisdiction or with an administrative agency. 21
	239	+	After filing, the disclosure obligation is a continuing obligation, and within thirty 22
	240	+	days of entering into a litigation financing contract or amending an existing litigation 23
	241	+	financing contract, the consumer or the consumer's legal representative shall disclose any 24
	242	+	new or amended litigation financing contract to the parties specified in this section. 25
	243	+	The existence of the litigation financing contract and all participants or parties to a 26
	244	+	litigation financing contract are permissible subjects of discovery in any civil action or 27
	245	+	administrative proceeding for which litigation financing is provided under the contract, 28
	246	+	after a civil action or an administrative proceeding has been filed. 29
	247	+	Section 12. That a NEW SECTION be added to a NEW CHAPTER in title 54: 30
	248	+	This Act does not apply to: 31
	249	+	(1) Any litigation financing provided by an entity engaged in commerce or business 32
	250	+	activity if the entity does not: 33 25.361.21 8 175
251	251		Underscores indicate new language.
252	252		Overstrikes indicate deleted language.
253		-	(1) Any litigation financing provided by an entity engaged in commerce or business 1
254		-	activity if the entity does not: 2
255		-	(a) Charge or collect any interest, fees, or other consideration; 3
256		-	(b) Retain or receive any financial interest in the outcome of the civil action, 4
257		-	administrative proceeding, claim, or cause of action; or 5
258		-	(c) Receive any right to recovery or payment from the amount of any judgment, 6
259		-	award, settlement, verdict, or other form of monetary relief obtained in the 7
260		-	civil action, administrative proceeding, claim, or cause of action; or 8
261		-	(2) A regulated lender that does not receive, in consideration for loaning money to any 9
262		-	person, a right to payment from the value of any proceeds or other consideration 10
263		-	realized from any judgment award, settlement, verdict, or other form of monetary 11
264		-	relief any person may receive or recover in relation to any civil action, 12
265		-	administrative proceeding, claim, or cause of action. 13
266		-	Section 13. That a NEW SECTION be added to a NEW CHAPTER in title 54: 14
267		-	This Act applies to any civil action filed or certified as a class action in which 15
268		-	litigation financing is provided. A litigation financer owes a fiduciary duty to all class 16
269		-	members or intended beneficiaries of a certified class and shall act in a manner consistent 17
270		-	with the litigation financer's fiduciary duty throughout the civil action. 18
271		-	In addition to the disclosure requirements set forth in section 11 of this Act, the 19
272		-	legal representative of the putative class shall disclose to all parties, putative class 20
273		-	members, and the court any legal, financial, or other relationship between the legal 21
274		-	representative and the litigation financer. A class member is entitled to receive from the 22
275		-	class counsel a true and correct copy of the litigation financing contract on request. 23
276		-	Section 14. That a NEW SECTION be added to a NEW CHAPTER in title 54: 24
277		-	A litigation financer is jointly and severally liable for any award or order imposing 25
278		-	or assessing costs or monetary sanctions against a consumer arising from or relating to 26
279		-	any civil action, administrative proceeding, claim, or cause of action for which the litigation 27
280		-	financer is providing litigation financing. 28
281		-	Section 15. That a NEW SECTION be added to a NEW CHAPTER in title 54: 29 25.361.22 9 175
	253	+	(a) Charge or collect any interest, fees, or other consideration; 1
	254	+	(b) Retain or receive any financial interest in the outcome of the civil action, 2
	255	+	administrative proceeding, claim, or cause of action; or 3
	256	+	(c) Receive any right to recovery or payment from the amount of any judgment, 4
	257	+	award, settlement, verdict, or other form of monetary relief obtained in the 5
	258	+	civil action, administrative proceeding, claim, or cause of action; or 6
	259	+	(2) A regulated lender that does not receive, in consideration for loaning money to any 7
	260	+	person, a right to payment from the value of any proceeds or other consideration 8
	261	+	realized from any judgment award, settlement, verdict, or other form of monetary 9
	262	+	relief any person may receive or recover in relation to any civil action, 10
	263	+	administrative proceeding, claim, or cause of action. 11
	264	+	Section 13. That a NEW SECTION be added to a NEW CHAPTER in title 54: 12
	265	+	This Act applies to any civil action filed or certified as a class action in which 13
	266	+	litigation financing is provided. A litigation financer owes a fiduciary duty to all class 14
	267	+	members or intended beneficiaries of a certified class and shall act in a manner consistent 15
	268	+	with the litigation financer's fiduciary duty throughout the civil action. 16
	269	+	In addition to the disclosure requirements set forth in section 11 of this Act, the 17
	270	+	legal representative of the putative class shall disclose to all parties, putative class 18
	271	+	members, and the court any legal, financial, or other relationship between the legal 19
	272	+	representative and the litigation financer. A class member is entitled to receive from the 20
	273	+	class counsel a true and correct copy of the litigation financing contract on request. 21
	274	+	Section 14. That a NEW SECTION be added to a NEW CHAPTER in title 54: 22
	275	+	A litigation financer is jointly and severally liable for any award or order imposing 23
	276	+	or assessing costs or monetary sanctions against a consumer arising from or relating to 24
	277	+	any civil action, administrative proceeding, claim, or cause of action for which the litigation 25
	278	+	financer is providing litigation financing. 26
	279	+	Section 15. That a NEW SECTION be added to a NEW CHAPTER in title 54: 27
	280	+	Any violation of this Act by the litigation financer renders the litigation financing 28
	281	+	contract unenforceable by the litigation financer or any successor -in-interest to the 29
	282	+	litigation financing contract. 30
	283	+	Section 16. That a NEW SECTION be added to a NEW CHAPTER in title 54: 31 25.361.21 9 175
282	284		Underscores indicate new language.
283	285		Overstrikes indicate deleted language.
284		-	Any violation of this Act by the litigation financer renders the litigation financing 1
285		-	contract unenforceable by the litigation financer or any successor -in-interest to the 2
286		-	litigation financing contract. 3
287		-	Section 16. That a NEW SECTION be added to a NEW CHAPTER in title 54: 4
288		-	This Act applies to any civil action or administrative proceeding pending on or 5
289		-	commenced after July 1, 2025. 6
	286	+	This Act applies to any civil action or administrative proceeding pending on or 1
	287	+	commenced after July 1, 2025. 2