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A BILL TO BE ENTITLED
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AN ACT
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relating to mandatory disclosure of third-party litigation |
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financing agreements. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Subchapter A, Chapter 22, Government Code, is |
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amended by adding Section 22.018 to read as follows: |
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Sec. 22.018. DISCLOSURE OF THIRD-PARTY LITIGATION |
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FINANCING. (a) In this section: |
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(1) "Financing" means the provision of monetary or |
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in-kind support for a party's filing and prosecution of a civil |
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action, including the payment of an attorney to represent the |
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party, the payment of any fees for any witnesses for the party, the |
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payment of any fees for any experts for the party, or the payment of |
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any costs of the civil action. |
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(2) "Third-party litigation financing" means the |
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provision of financing to a person or group of persons that is or |
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may become a party to a civil action, or an attorney for the person |
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or group, with repayment of the financing being conditioned on and |
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sourced from the person's proceeds from the civil action by |
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judgment, settlement, or otherwise. The term does not include: |
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(A) any extension of credit from any person to |
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any attorney licensed by the supreme court to practice law where the |
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obligation of the attorney to repay all or part of the extension of |
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credit, including any interest on the extended credit, is not |
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contingent on the outcome of a specified civil action or portfolio |
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of civil actions in which the attorney is representing a person |
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other than the attorney, whether or not the credit agreement |
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provides the creditor a security interest in any proceeds of any |
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civil action in which the attorney is representing a person other |
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than the attorney; or |
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(B) any contingent fee arrangement entered into |
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by an attorney licensed by the supreme court to practice law. |
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(b) The supreme court shall adopt rules to provide for the |
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mandatory disclosure of third-party litigation financing |
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agreements to parties in a civil action in connection with which |
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third-party litigation financing is provided. |
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SECTION 2. The Supreme Court of Texas shall adopt rules |
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under Section 22.018, Government Code, as added by this Act, not |
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later than December 31, 2013. The rules apply only to a civil |
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action commenced on or after the effective date of the rules. |
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SECTION 3. This Act takes effect September 1, 2013. |