Bill Text: NY A09241 | 2015-2016 | General Assembly | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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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

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                STATE OF NEW YORK
        ________________________________________________________________________
                                         9241--B
                   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
        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.
    20    3. "Funded amount" shall mean the amount  of  money  provided  to  the
    21  consumer in consumer litigation financing.
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD13354-05-6
        A. 9241--B                          2
     1    4.  "Resolution date" shall mean the date the funded amount and agreed
     2  upon charges are delivered to the consumer litigation financing company.
     3    §  899-ddd.  Contract requirements. 1. Contracts shall contain a right
     4  of rescission, allowing the consumer to cancel the  contract  without  a
     5  penalty  if  the  consumer returns the full amount of disbursed funds to
     6  the company within ten business days.
     7    2. Contracts shall contain a written acknowledgement by  the  attorney
     8  retained by the consumer that attests:
     9    (a)  the  attorney  is being paid on a contingency basis pursuant to a
    10  written fee agreement; and
    11    (b) the attorney is not receiving a referral fee from  the  litigation
    12  funding company in connection with the consumer's funding.
    13    3.  Contracts  shall  clearly  outline  a scheduled fee structure that
    14  outlines repayment terms including:
    15    (a) the funded amount plus charges written out as itemized amounts;
    16    (b) the charges outlined as a percentage amount exceeding  the  funded
    17  amount; and
    18    (c) itemized one-time fees including paperwork processing and adminis-
    19  trative fees.
    20    4.  Contracts shall contain a no penalty provision for the pre-payment
    21  of the funded amount prior to the settlement of his or  her  case.  Such
    22  provision shall release the consumer from any obligation to share his or
    23  her settlement or verdict.
    24    §  899-eee.  Prohibitions.  1.  Consumer  litigation funding companies
    25  shall be prohibited from paying, accepting or offering referral fees  or
    26  any  type  of  consideration to and from any medical providers, licensed
    27  therapists or attorneys for referring a consumer to the company.
    28    2. The company shall be prohibited from making any inquiries with  the
    29  consumer's  representative  attorney that would violate the terms of the
    30  attorney-client privilege at any point in time.
    31    3. No attorney or law firm retained by a consumer that utilizes  liti-
    32  gation financing may have a financial interest in said company.
    33    4.  Consumer  litigation  funding  companies  shall be prohibited from
    34  attempting to obtain, or obtaining a waiver of any remedy, including but
    35  not limited to, compensatory, statutory or punitive  damages,  that  the
    36  consumer might otherwise have.
    37    5.  Consumer  litigation  funding  companies  shall be prohibited from
    38  attempting to effect arbitration or otherwise effect waiver of a consum-
    39  er's right to trial by jury for complaints  arising  from  the  consumer
    40  litigation funding transaction.
    41    6.  Consumer  litigation  funding  companies  shall be prohibited from
    42  assigning a consumer litigation funding contract in whole or in part.
    43    7. Maximum amount of charges:
    44    (a) the maximum amount of charges which may be assessed pursuant to  a
    45  consumer  litigation funding contract shall not be in excess of the rate
    46  prescribed in section fourteen-a of the banking law, when expressed as a
    47  proportion of the funded amount; and
    48    (b) any consumer litigation funding contract which exceeds  such  rate
    49  shall  be considered usurious as defined by section 5-501 of the general
    50  obligations law.
    51    § 899-fff. Registration. 1. Each consumer litigation  funding  company
    52  that  wishes  to engage in business in the state of New York shall first
    53  register with the New York department of state.
    54    2. Each applicant's registration must be filed in a manner  prescribed
    55  by  the  New York department of state with an initial accompanied fee of
        A. 9241--B                          3
     1  five hundred dollars. Registrations must be renewed every two  years  on
     2  or before the thirtieth day of September.
     3    3. The New York department of state shall issue certificates of regis-
     4  tration  after  both  understanding  and  attesting to the character and
     5  fitness of the applicant company with sufficient reason to  believe  the
     6  company will operate honestly and fairly.
     7    §  899-ggg.  Penalty  for violation. Any company found in violation of
     8  any provisions of this article in a specific funding  case,  waives  its
     9  right  to recover both the funded amount and any additional fees in that
    10  particular case.
    11    § 2. This act shall take effect immediately.