Bill Text: NY A09241 | 2015-2016 | General Assembly | Amended
Bill Title: Establishes contract requirements for third party litigation financing which includes requiring contracts to contain a right of rescission, a written acknowledgement by the attorney retained, a clear outline of the scheduled fee structure and a no penalty provision.
Spectrum: Strong Partisan Bill (Democrat 12-1)
Status: (Introduced - Dead) 2016-06-17 - ordered to third reading rules cal.540 [A09241 Detail]
Download: New_York-2015-A09241-Amended.html
STATE OF NEW YORK ________________________________________________________________________ 9241--C IN ASSEMBLY February 4, 2016 ___________ Introduced by M. of A. SIMANOWITZ, GOTTFRIED, ZEBROWSKI, BRINDISI, TITONE, SEPULVEDA, HYNDMAN, DILAN -- Multi-Sponsored by -- M. of A. BRENNAN, COOK, FRIEND, ROBINSON, SIMON -- read once and referred to the Committee on Consumer Affairs and Protection -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee -- reported and referred to the Committee on Codes -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee -- again reported from said commit- tee with amendments, ordered reprinted as amended and recommitted to said committee AN ACT to amend the general business law, in relation to third party litigation financing The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. The general business law is amended by adding a new article 2 39-H to read as follows: 3 ARTICLE 39-H 4 THIRD PARTY LITIGATION FINANCING 5 Section 899-ccc. Definitions. 6 899-ddd. Contract requirements. 7 899-eee. Prohibitions. 8 899-fff. Registration. 9 899-ggg. Penalty for violation. 10 § 899-ccc. Definitions. As used in this article, the following terms 11 shall have the following meanings: 12 1. "Charges" shall mean the amount of money to be paid to the consumer 13 litigation funding company that exceeds the funded amount of principal 14 loan. 15 2. "Consumer litigation funding company" shall mean a person or entity 16 that enters into a non-recourse transaction wherein the company provides 17 funds to a consumer on the contingent right to receive the funded amount 18 and agreed upon charges obtained in the event of a settlement, judgment 19 or award. EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD13354-07-6A. 9241--C 2 1 3. "Funded amount" shall mean the amount of money provided to the 2 consumer in consumer litigation financing. 3 4. "Resolution date" shall mean the date the funded amount and agreed 4 upon charges are delivered to the consumer litigation financing company. 5 § 899-ddd. Contract requirements. 1. Contracts shall contain a right 6 of rescission, allowing the consumer to cancel the contract without a 7 penalty if the consumer returns the full amount of disbursed funds to 8 the company within ten business days. 9 2. Contracts shall contain a written acknowledgement by the attorney 10 retained by the consumer that attests: 11 (a) the attorney is being paid on a contingency basis pursuant to a 12 written fee agreement; and 13 (b) the attorney is not receiving a referral fee from the litigation 14 funding company in connection with the consumer's funding. 15 3. Contracts shall clearly outline a scheduled fee structure that 16 outlines repayment terms including: 17 (a) the funded amount plus charges written out as itemized amounts; 18 (b) the charges outlined as a percentage amount exceeding the funded 19 amount; and 20 (c) itemized one-time fees including paperwork processing and adminis- 21 trative fees. 22 4. Contracts shall contain a no penalty provision for the pre-payment 23 of the funded amount prior to the settlement of his or her case. Such 24 provision shall release the consumer from any obligation to share his or 25 her settlement or verdict. 26 § 899-eee. Prohibitions. 1. Consumer litigation funding companies 27 shall be prohibited from paying, accepting or offering referral fees or 28 any type of consideration to and from any medical providers, licensed 29 therapists or attorneys for referring a consumer to the company. 30 2. The company shall be prohibited from making any inquiries with the 31 consumer's representative attorney that would violate the terms of the 32 attorney-client privilege at any point in time. 33 3. No attorney or law firm retained by a consumer that utilizes liti- 34 gation financing may have a financial interest in said company. 35 4. Consumer litigation funding companies shall be prohibited from 36 attempting to obtain, or obtaining a waiver of any remedy, including but 37 not limited to, compensatory, statutory or punitive damages, that the 38 consumer might otherwise have. 39 5. Consumer litigation funding companies shall be prohibited from 40 attempting to effect arbitration or otherwise effect waiver of a consum- 41 er's right to trial by jury for complaints arising from the consumer 42 litigation funding transaction. 43 6. Consumer litigation funding companies shall be prohibited from 44 assigning a consumer litigation funding contract in whole or in part. 45 7. Maximum amount of charges: 46 (a) the maximum amount of charges which may be assessed pursuant to a 47 consumer litigation funding contract shall not be in excess of the rate 48 prescribed in section fourteen-a of the banking law, when expressed as a 49 proportion of the funded amount; and 50 (b) any consumer litigation funding contract which exceeds such rate 51 shall be considered usurious as defined by section 5-501 of the general 52 obligations law. 53 § 899-fff. Registration. 1. Each consumer litigation funding company 54 that wishes to engage in business in the state of New York shall first 55 register with the New York department of financial services.A. 9241--C 3 1 2. Each applicant's registration must be filed in a manner prescribed 2 by the New York department of financial services with an initial accom- 3 panied fee of five hundred dollars. Registrations must be renewed every 4 two years on or before the thirtieth day of September. 5 3. The New York department of financial services shall issue certif- 6 icates of registration after both understanding and attesting to the 7 character and fitness of the applicant company with sufficient reason to 8 believe the company will operate honestly and fairly. 9 § 899-ggg. Penalty for violation. Any company found in violation of 10 any provisions of this article in a specific funding case, waives its 11 right to recover both the funded amount and any additional fees in that 12 particular case. 13 § 2. This act shall take effect on the one hundred eightieth day after 14 it shall have become a law.