S03911 Summary:
| BILL NO | S03911B |
| SAME AS | SAME AS A08653-A |
| SPONSOR | ORTT |
| COSPNSR | AKSHAR, GALLIVAN, HANNON, HELMING, JACOBS, MARCHIONE, SEPULVEDA |
| MLTSPNSR | |
| Add Art 39-H §§899-ccc - 899-ggg, Gen Bus L | |
| Establishes contract requirements for third party litigation financing which includes requiring contracts to contain a right of rescission, a written acknowledgement by the attorney retained, a clear outline of the scheduled fee structure and a no penalty provision. | |
S03911 Actions:
| BILL NO | S03911B | |||||||||||||||||||||||||||||||||||||||||||||||||
| 01/30/2017 | REFERRED TO CONSUMER PROTECTION | |||||||||||||||||||||||||||||||||||||||||||||||||
| 03/13/2017 | AMEND AND RECOMMIT TO CONSUMER PROTECTION | |||||||||||||||||||||||||||||||||||||||||||||||||
| 03/13/2017 | PRINT NUMBER 3911A | |||||||||||||||||||||||||||||||||||||||||||||||||
| 05/16/2017 | 1ST REPORT CAL.997 | |||||||||||||||||||||||||||||||||||||||||||||||||
| 05/17/2017 | 2ND REPORT CAL. | |||||||||||||||||||||||||||||||||||||||||||||||||
| 05/22/2017 | ADVANCED TO THIRD READING | |||||||||||||||||||||||||||||||||||||||||||||||||
| 06/21/2017 | COMMITTED TO RULES | |||||||||||||||||||||||||||||||||||||||||||||||||
| 01/03/2018 | REFERRED TO CONSUMER PROTECTION | |||||||||||||||||||||||||||||||||||||||||||||||||
| 05/25/2018 | AMEND AND RECOMMIT TO CONSUMER PROTECTION | |||||||||||||||||||||||||||||||||||||||||||||||||
| 05/25/2018 | PRINT NUMBER 3911B | |||||||||||||||||||||||||||||||||||||||||||||||||
S03911 Memo:
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S03911 Text:
Go to topSTATE OF NEW YORK ________________________________________________________________________ 3911--B 2017-2018 Regular Sessions IN SENATE January 30, 2017 ___________ Introduced by Sens. ORTT, AKSHAR, GALLIVAN, HANNON, HELMING, JACOBS, MARCHIONE -- read twice and ordered printed, and when printed to be committed to the Committee on Consumer Protection -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee -- recommitted to the Committee on Consumer Protection in accordance with Senate Rule 6, sec. 8 -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee AN ACT to amend the general business law, in relation to third party litigation financing The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. The general business law is amended by adding a new article 2 39-H to read as follows: 3 ARTICLE 39-H 4 THIRD PARTY LITIGATION FINANCING 5 Section 899-ccc. Definitions. 6 899-ddd. Contract requirements. 7 899-eee. Prohibitions. 8 899-fff. Registration. 9 899-ggg. Penalty for violation. 10 § 899-ccc. Definitions. As used in this article, the following terms 11 shall have the following meanings: 12 1. "Charges" shall mean the amount of money to be paid to the consumer 13 litigation funding company that exceeds the funded amount of principal 14 loan. 15 2. "Consumer litigation funding company" shall mean a person or entity 16 that enters into a consumer litigation funding contract to provide non- 17 recourse funding of no more than five hundred thousand dollars to a 18 consumer. EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD04763-05-8S. 3911--B 2 1 3. "Consumer litigation funding contract" shall mean a contract to 2 provide non-recourse funding of no more than five hundred thousand 3 dollars to a consumer on the contingent right to receive the funded 4 amount and agreed upon charges obtained in the event of a settlement, 5 judgment or award. 6 4. "Funded amount" shall mean the amount of money provided to the 7 consumer in consumer litigation financing. 8 5. "Resolution date" shall mean the date the funded amount and agreed 9 upon charges are delivered to the consumer litigation financing company. 10 § 899-ddd. Contract requirements. 1. Consumer litigation funding 11 contracts shall contain a right of rescission, allowing the consumer to 12 cancel the consumer litigation funding contract without a penalty if the 13 consumer returns the full amount of disbursed funds to the company with- 14 in ten business days. 15 2. Consumer litigation funding contracts shall contain a written 16 acknowledgement by the attorney retained by the consumer that attests: 17 (a) the attorney is being paid on a contingency basis pursuant to a 18 written fee agreement; and 19 (b) the attorney is not receiving a referral fee from the litigation 20 funding company in connection with the consumer's funding. 21 3. Consumer litigation funding contracts shall clearly outline a sche- 22 duled fee structure that outlines repayment terms including: 23 (a) the funded amount plus charges written out as itemized amounts; 24 (b) the charges outlined as a percentage amount exceeding the funded 25 amount; and 26 (c) itemized one-time fees including paperwork processing and adminis- 27 trative fees. 28 4. Consumer litigation funding contracts shall contain a no penalty 29 provision for the pre-payment of the funded amount prior to the settle- 30 ment of his or her case. Such provision shall release the consumer from 31 any obligation to share his or her settlement or verdict. 32 § 899-eee. Prohibitions. 1. Consumer litigation funding companies 33 shall be prohibited from paying, accepting or offering referral fees or 34 any type of consideration to and from any medical providers, licensed 35 therapists or attorneys for referring a consumer to the company for the 36 purpose of entering into a consumer litigation funding contract. 37 2. The company shall be prohibited from making any inquiries with the 38 consumer's representative attorney that would violate the terms of the 39 attorney-client privilege at any point in time. 40 3. No attorney or law firm retained by a consumer who has entered into 41 a consumer litigation funding contract with a consumer litigation fund- 42 ing company may have a financial interest in said company. 43 4. Consumer litigation funding companies shall be prohibited from 44 attempting to obtain, or obtaining a waiver of any remedy, including but 45 not limited to, compensatory, statutory or punitive damages, that the 46 consumer might otherwise have. 47 5. Consumer litigation funding companies shall be prohibited from 48 attempting to effect arbitration or otherwise effect waiver of a consum- 49 er's right to trial by jury for complaints arising from the consumer 50 litigation funding contract. 51 6. Consumer litigation funding companies shall be prohibited from 52 assigning a consumer litigation funding contract in whole or in part. 53 7. Maximum amount of charges: 54 (a) the maximum amount of charges which may be assessed pursuant to a 55 consumer litigation funding contract shall not be in excess of the rateS. 3911--B 3 1 prescribed in section 190.42 of the penal law (criminal usury in the 2 first degree), when expressed as a proportion of the funded amount; and 3 (b) any consumer litigation funding contract which exceeds such rate 4 shall be considered usurious as defined by section 5-501 of the general 5 obligations law. 6 § 899-fff. Registration. 1. Each consumer litigation funding company 7 that wishes to engage in business in the state of New York shall first 8 register with the New York department of financial services. 9 2. Each applicant's registration must be filed in a manner prescribed 10 by the New York department of financial services with an initial accom- 11 panied fee of five hundred dollars. Registrations must be renewed every 12 two years on or before the thirtieth day of September. 13 3. The New York department of financial services shall issue certif- 14 icates of registration after both understanding and attesting to the 15 character and fitness of the applicant company with sufficient reason to 16 believe the company will operate honestly and fairly. 17 § 899-ggg. Penalty for violation. Any company found in violation of 18 any provisions of this article in a specific funding case, waives its 19 right to recover both the funded amount and any additional fees in that 20 particular case. 21 § 2. This act shall take effect on the one hundred eightieth day after 22 it shall have become a law.