Bill > H5907

This bill addresses litigation lending agreements (LLAs) in Rhode Island by establishing new regulations to protect consumers from potentially predatory financial practices. The bill defines an LLA as an agreement where money is advanced to litigants with the expectation of repayment from litigation proceeds, excluding attorney expense advancements. Recognizing that some litigation financing contracts charge extremely high interest rates—potentially exceeding 100% annually—the bill mandates that all payments made under an LLA beyond the original amount received shall be considered interest subject to state usury laws. This means these financial agreements must now comply with existing state regulations on loan interest rates, regardless of how the agreement is labeled (whether as a "loan," "advance," "investment," or "assignment of proceeds") or whether repayment is contingent on the litigation's outcome. The legislation aims to protect citizens from what the bill describes as financially detrimental lending practices by ensuring that litigation funding advances conform to established state lending regulations. The act will take effect immediately upon its passage.