| 1 | 1 | | 86R7092 TSR-F |
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| 2 | 2 | | By: Fallon S.B. No. 1567 |
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| 3 | 3 | | |
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| 4 | 4 | | |
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| 5 | 5 | | A BILL TO BE ENTITLED |
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| 6 | 6 | | AN ACT |
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| 7 | 7 | | relating to mandatory disclosure of third-party litigation |
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| 8 | 8 | | financing agreements. |
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| 9 | 9 | | BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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| 10 | 10 | | SECTION 1. Subchapter A, Chapter 22, Government Code, is |
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| 11 | 11 | | amended by adding Section 22.021 to read as follows: |
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| 12 | 12 | | Sec. 22.021. DISCLOSURE OF THIRD-PARTY LITIGATION |
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| 13 | 13 | | FINANCING. (a) In this section: |
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| 14 | 14 | | (1) "Financing" means the provision of monetary or |
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| 15 | 15 | | in-kind support to a person or group of persons who have or will |
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| 16 | 16 | | file or prosecute a civil action, including a payment to an attorney |
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| 17 | 17 | | who represents the person or group, a payment to a fact or expert |
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| 18 | 18 | | witness, a payment of the costs of the civil action, or the |
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| 19 | 19 | | provision of funds or credit to be used in the future to support the |
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| 20 | 20 | | civil action. The term includes the provision of monetary or |
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| 21 | 21 | | in-kind support, regardless of whether the support is called a |
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| 22 | 22 | | loan, an advance, a purchase, or another term. |
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| 23 | 23 | | (2) "Third-party litigation financing" means the |
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| 24 | 24 | | provision of financing with repayment being conditioned on and |
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| 25 | 25 | | sourced from the person's or group's proceeds from the civil action, |
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| 26 | 26 | | regardless of whether the proceeds are obtained through collection |
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| 27 | 27 | | of a judgment, payment of a settlement, or otherwise. The term does |
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| 28 | 28 | | not include: |
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| 29 | 29 | | (A) an extension of credit to any attorney or law |
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| 30 | 30 | | firm when the obligation of the attorney or law firm to repay the |
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| 31 | 31 | | loan is required by the loan agreement and is not contingent on the |
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| 32 | 32 | | outcome of a specified civil action or portfolio of civil actions; |
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| 33 | 33 | | or |
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| 34 | 34 | | (B) a contingent fee arrangement between an |
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| 35 | 35 | | attorney or law firm and a client. |
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| 36 | 36 | | (b) The supreme court shall adopt rules to provide for the |
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| 37 | 37 | | mandatory disclosure of third-party litigation financing |
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| 38 | 38 | | agreements to the parties in a civil action in connection with which |
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| 39 | 39 | | third-party litigation financing is provided. |
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| 40 | 40 | | SECTION 2. The Supreme Court of Texas shall adopt rules |
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| 41 | 41 | | under Section 22.021, Government Code, as added by this Act, not |
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| 42 | 42 | | later than December 31, 2019. The rules apply only to a civil |
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| 43 | 43 | | action commenced on or after the effective date of the rules. |
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| 44 | 44 | | SECTION 3. This Act takes effect September 1, 2019. |
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