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IA SF53
A bill for an act prohibiting litigation financing contracts, and including effective date and applicability provisions.
summary
Introduced
01/15/2025
01/15/2025
In Committee
01/15/2025
01/15/2025
Crossed Over
Passed
Dead
Introduced Session
91st General Assembly
Bill Summary
This bill prohibits litigation financing contracts. Litigation financing contracts are agreements between a third party and a plaintiff, an attorney, or a law firm of a civil action in which the third party provides funding for legal expenses in exchange for a percentage of any settlement or judgment. The bill does not prohibit the provision of legal services on a contingency fee basis, or the advancement of legal costs, where such services or costs are provided for or on behalf of a consumer by an attorney representing the consumer in the dispute and in accordance with Iowa rules of professional conduct, a commercial tort claim, or a claim under Code chapter 87 (workers’ compensation). The bill takes effect upon enactment and applies to litigation financing contracts entered into on or after the effective date of the bill.
AI Summary
This bill prohibits litigation financing contracts in Iowa, rendering any such agreements void and unenforceable. Specifically, the bill targets nonrecourse transactions where a third party provides financing to a consumer, attorney, or law firm in exchange for a portion of potential legal proceeds from a judgment, settlement, or verdict. The legislation does not impact traditional contingency fee arrangements or legal cost advancements made by attorneys representing consumers in accordance with professional conduct rules. The bill also includes important exceptions for commercial tort claims and claims under a specific chapter of Iowa law. The act will take effect immediately upon enactment and will apply to litigation financing contracts entered into on or after its effective date, meaning existing contracts will not be retroactively invalidated. By voiding these financing contracts, the bill aims to restrict third-party funding of legal claims, potentially to protect consumers and the legal system from what legislators may view as potentially predatory financial arrangements.
Committee Categories
Justice
Sponsors (1)
Last Action
Subcommittee recommends passage. (on 01/23/2025)
Official Document
bill text
bill summary
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bill summary
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bill summary
| Document Type | Source Location |
|---|---|
| State Bill Page | https://www.legis.iowa.gov/legislation/BillBook?ga=91&ba=SF53 |
| BillText | https://www.legis.iowa.gov/docs/publications/LGI/91/attachments/SF53.html |
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