Bill > SB705

Introduced Session

This bill 1) imposes certain requirements and restrictions related to transactions in which a company provides funding to a party involved in civil litigation and the funding is to be repaid from the proceeds of the legal action, and 2) prohibits certain foreign persons from financing civil litigation. Nonrecourse civil litigation advances This bill creates provisions governing nonrecourse civil litigation advance transactions. Under the bill, a “consumer” is an individual who is or may become a plaintiff or claimant in a civil action or other proceeding (dispute), and a “company” is a person that enters into a nonrecourse civil litigation advance transaction with a consumer. A “nonrecourse civil litigation advance” (advance) is a transaction in which a company makes a cash payment to or on behalf of a consumer who has a pending dispute in exchange for the right to receive an amount out of the proceeds of any realized settlement, judgment, or award the consumer may receive in the dispute. In a nonrecourse civil litigation advance transaction, all of the following apply: 1) there must be a written contract between the company and the consumer governing the transaction; 2) the company may not contract for, or otherwise LRB-1903/1 ARG:cdc 2025 - 2026 Legislature SENATE BILL 705 require, repayment in an amount that would result in a finance charge greater than the prime interest rate plus 10 percent; 3) the company may not advance to the consumer more than $100,000; 4) the consumer may prepay the advance at any time and, upon a prepayment, is entitled to a pro rata reduction in the finance charge imposed; 5) the contract may not provide for repayment of the advance later than 36 months after the contract is entered into; 6) the company may not pay commissions or referral fees to attorneys or health care providers; and 7) the contract must contain specified information, including the annual percentage rate of the finance charge imposed and the consumer’s right to receive a reduction in the finance charge imposed if prepayment is made, as well as provisions that disclose all one-time fees charged to the consumer, disclose the amount to be received by the consumer and the amount the consumer assigns to the company, state that the consumer has a right to cancel the contract within five days, state that the company has no right to make decisions or otherwise participate in the dispute, and state that, except for the consumer’s prepayments, the company may be paid only from the consumer’s proceeds of the dispute and is not entitled to be repaid if there are no such proceeds. Proceeds of the dispute are determined after deducting the consumer’s reasonable attorney fees and costs. A company that violates any of these requirements or restrictions is subject to a civil forfeiture of not less than $25 nor more than $5,000, unless the company establishes that the violation was the result of an unintentional good faith error and the company had in place policies or procedures designed to achieve compliance. If the company’s violation was willful, the company also may not recover from the consumer the advance or any finance charge. The Department of Trade, Agriculture and Consumer Protection has enforcement authority over violations. Civil litigation financing The bill prohibits parties in civil actions and their attorneys of record from receiving from a nonparty any amount of money to pay for litigation costs if the money is sourced directly or indirectly from any of the following persons: 1. A foreign state, as defined in the federal Foreign Sovereign Immunities Act of 1976, as amended. 2. A citizen of a foreign state. 3. An agent of a foreign principal, as defined in the federal Foreign Agents Registration Act of 1938, as amended. 4. An investment fund owned or controlled by a foreign state or agent of a foreign principal. If a court finds that a party or party's attorney has violated this prohibition or has knowingly permitted such a violation, the court may impose a forfeiture on the party or party's attorney in an amount up to the amount of funding sourced from a nonparty in violation of this prohibition, as well as other deterrent sanctions.

AI Summary

Committee Categories

Howard Marklein (R)*,  Brad Pfaff (D)*,  Van Wanggaard (R)*,  Tara Johnson (D),  Jeff Mursau (R),  Jerry O'Connor (R),  Jim Piwowarczyk (R),  David Steffen (R),  Ron Tusler (R), 

Public hearing held (on 01/07/2026)

Official Document