Bill > A00240

This bill establishes comprehensive regulations for consumer litigation funding in New York, creating a new legal framework to protect consumers who seek financial assistance while waiting for the resolution of a legal claim. The legislation defines consumer litigation funding as a non-recourse transaction where a funding company purchases a contingent right to receive a portion of potential legal settlement proceeds. Key provisions include mandatory contract requirements such as clear language, a five-day right of rescission, and detailed disclosures about funded amounts, charges, and payment schedules. The bill prohibits funding companies from making referral payments, interfering with legal decisions, or having financial interests in consumers' attorneys. Companies must register with the state, pay registration fees, and submit annual reports about their funding activities. The law requires attorneys to provide written acknowledgments about the funding and ensures that consumers are only obligated to repay funds from successful legal claims. Importantly, the bill explicitly states that these transactions are not considered loans and are not subject to standard loan regulations. The legislation aims to create transparency, prevent predatory practices, and protect consumers by establishing clear guidelines for litigation funding transactions.

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https://www.nysenate.gov/legislation/bills/2025/A240