86R7092 TSR-F
By: Fallon S.B. No. 1567
A BILL TO BE ENTITLED
AN ACT
relating to mandatory disclosure of third-party litigation
financing agreements.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter A, Chapter 22, Government Code, is
amended by adding Section 22.021 to read as follows:
Sec. 22.021. DISCLOSURE OF THIRD-PARTY LITIGATION
FINANCING. (a) In this section:
(1) "Financing" means the provision of monetary or
in-kind support to a person or group of persons who have or will
file or prosecute a civil action, including a payment to an attorney
who represents the person or group, a payment to a fact or expert
witness, a payment of the costs of the civil action, or the
provision of funds or credit to be used in the future to support the
civil action. The term includes the provision of monetary or
in-kind support, regardless of whether the support is called a
loan, an advance, a purchase, or another term.
(2) "Third-party litigation financing" means the
provision of financing with repayment being conditioned on and
sourced from the person's or group's proceeds from the civil action,
regardless of whether the proceeds are obtained through collection
of a judgment, payment of a settlement, or otherwise. The term does
not include:
(A) an extension of credit to any attorney or law
firm when the obligation of the attorney or law firm to repay the
loan is required by the loan agreement and is not contingent on the
outcome of a specified civil action or portfolio of civil actions;
or
(B) a contingent fee arrangement between an
attorney or law firm and a client.
(b) The supreme court shall adopt rules to provide for the
mandatory disclosure of third-party litigation financing
agreements to the parties in a civil action in connection with which
third-party litigation financing is provided.
SECTION 2. The Supreme Court of Texas shall adopt rules
under Section 22.021, Government Code, as added by this Act, not
later than December 31, 2019. The rules apply only to a civil
action commenced on or after the effective date of the rules.
SECTION 3. This Act takes effect September 1, 2019.