BILL ANALYSIS
Senate Research Center H.B. 2987
AUTHOR'S/SPONSOR'S STATEMENT OF INTENT
RULEMAKING AUTHORITY
SECTION BY SECTION ANALYSIS
SECTION 1. Amends Title 6, Civil Practice and Remedies Code, by adding Chapter 148, as follows:
CHAPTER 148. PROHIBITION ON LAWSUIT ADVANCE FUNDING
FOR USURIOUS INTEREST
Sec. 148.001. PROHIBITION ON LAWSUIT ADVANCE FUNDING FOR USURIOUS INTEREST. (a) Provides that all funding advanced to a person whose repayment is contingent upon the person's recovery in a lawsuit is a loan subject to the usurious interest prohibition in Section 302.001 (Contracting For, Charging, or Receiving Interest or Time Price Differential; Usurious Interest), Finance Code, and the penalties prescribed by Chapter 305 (Penalties and Remedies), Finance Code. Provides that a contract to provide such funding that allows a rate of return in excess of the usurious interest prohibition in Section 302.001, Finance Code, is against the public policy of this state.
(b) Provides that this section does not apply to contracts entered into between an attorney and a client for the purpose of compensating the attorney for providing legal services.
SECTION 2. Effective date: September 1, 2005.
Makes application of this Act prospective.