Bill Text: IL HB0073 | 2023-2024 | 103rd General Assembly | Engrossed

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Bill Title: Amends the Consumer Legal Funding Act. Provides that the provisions of the Act do not apply to consumer legal funding if (i) the amount of funding is greater than $500,000 and (ii) the consumer does not use or intend to use any of the proceeds for personal, family, or household expenses. Makes other changes.

Spectrum: Partisan Bill (Democrat 3-0)

Status: (Engrossed) 2023-06-26 - Pursuant to Senate Rule 3-9(b) / Referred to Assignments [HB0073 Detail]

Download: Illinois-2023-HB0073-Engrossed.html

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AN ACT concerning business.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Consumer Legal Funding Act is amended by
changing Sections 5 and 55 as follows:
(815 ILCS 121/5)
Sec. 5. Definitions.
"Advertise" means publishing or disseminating any written,
electronic, or printed communication, or any communication by
means of recorded telephone messages or transmitted on radio,
television, the Internet, or similar communications media,
including film strips, motion pictures, and videos, published,
disseminated, circulated, or placed before the public,
directly or indirectly, for the purpose of inducing a consumer
to enter into a consumer legal funding.
"Charges" means the fees, as set forth in Section 25, to be
paid to the consumer legal funding company by or on behalf of
the consumer above the funded amount provided by or on behalf
of the company to an Illinois consumer pursuant to this Act.
"Consumer" means a natural person who has a pending legal
claim and who resides or is domiciled in Illinois.
"Consumer legal funding" or "funding" means a nonrecourse
transaction in which a company purchases and a consumer

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transfers to the company an unvested, contingent future
interest in the potential net proceeds of a settlement or
judgment obtained from the consumer's legal claim; and in
which, if no proceeds are obtained from the consumer's legal
claim, the consumer is not required to repay the company the
consumer legal funding amount or charges.
"Consumer legal funding company" or "company" means a
person or entity that enters into, purchases, or services a
consumer legal funding transaction with an Illinois consumer.
"Consumer legal funding company" does not include:
(1) an immediate family member of the consumer;
(2) a bank, lender, financing entity, or other special
purpose entity:
(A) that provides financing to a consumer legal
funding company; or
(B) to which a consumer legal funding company
grants a security interest or transfers any rights or
interest in a consumer legal funding; or
(3) an attorney or accountant who provides services to
a consumer.
"Department" means the Department of Financial and
Professional Regulation.
"Funded amount" means the amount of moneys provided to, or
on behalf of, the consumer in the consumer legal funding.
"Funded amount" does not include charges except for charges
that are deducted from the funded amount.

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"Funding date" means the date on which the funded amount
is transferred to the consumer by the consumer legal funding
company either by personal delivery; via wire, ACH, or other
electronic means; or mailed by insured, certified, or
registered United States mail.
"Immediate family member" means a parent; sibling; child
by blood, adoption, or marriage; spouse; grandparent; or
grandchild.
"Legal claim" means a bona fide civil claim or cause of
action.
"Resolution amount" means the funded amount plus the
agreed-upon charges that are delivered to the consumer legal
funding company on the resolution date.
"Resolution date" means the date the resolution amount is
delivered to the consumer legal funding company.
"Secretary" means the Secretary of Financial and
Professional Regulation or the Secretary's designee.
(Source: P.A. 102-987, eff. 5-27-22.)
(815 ILCS 121/55)
Sec. 55. Consumer legal funding license scope.
(a) It shall be unlawful for any person or entity to
operate as a consumer legal funding provider in this State
except as authorized by this Act and without first having
obtained a license in accordance with this Act. No person or
entity may engage in any device, subterfuge, or pretense to

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evade the requirements of this Act. However, any company that
has a license in good standing under the Consumer Installment
Loan Act on the effective date of this Act shall be entitled to
make consumer legal fundings under the terms of this Act upon
the effective date of this Act if that company files an
application for a consumer legal funding license within 60
days after the Department issues forms for the filing of that
application and until the Department approves or denies the
application for a funding license. Any consumer legal funding
contract made by any person or entity in violation of this
subsection shall be null and void and the person or entity who
entered into the consumer legal funding transaction shall have
no right to collect, attempt to collect, receive, or retain
any principal, interest, or charges related to the consumer
legal funding transaction.
(b) The provisions of this Act do not apply to a bank,
savings bank, savings association, or credit union organized
under the laws of this State, any other state, or under the
laws of the United States.
(b-1) The provisions of this Act do not apply to consumer
legal funding if (i) the amount of funding is greater than
$500,000 and (ii) the consumer does not use or intend to use
any of the proceeds for personal, family, or household
expenses.
(c) Any consumer legal funding made by a person not
licensed under this Act, including a person holding an

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inactive license, and not exempt under this Act shall be null
and void, and no person or entity shall have any right to
collect, attempt to collect, receive, or retain any principal,
fee, interest, or charges related to the funding.
(Source: P.A. 102-987, eff. 5-27-22.)