| |
| |
|
|
A BILL TO BE ENTITLED
|
|
|
AN ACT
|
|
|
relating to litigation financing transactions. |
|
|
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
|
|
SECTION 1. Subtitle B, Title 4, Finance Code, is amended by |
|
|
adding Chapter 354 to read as follows: |
|
|
CHAPTER 354. LITIGATION FINANCING AGREEMENTS |
|
|
SUBCHAPTER A. GENERAL PROVISIONS |
|
|
Sec. 354.001. DEFINITIONS. In this chapter: |
|
|
(1) "Charge" or "charges" means the amount paid to a |
|
|
litigation financing company by or on behalf of the consumer that is |
|
|
in addition to the funded amount provided by or on behalf of the |
|
|
company to a consumer. |
|
|
(2) "Consumer" means an individual who has a pending |
|
|
legal claim and who: |
|
|
(A) resides in this state; or |
|
|
(B) has the legal claim in this state. |
|
|
(3) "Funded amount" means the amount provided to or on |
|
|
behalf of the consumer under a litigation financing agreement. The |
|
|
term does not include a charge. |
|
|
(4) "Funding date" means the date on which the |
|
|
litigation financing company transfers or otherwise delivers the |
|
|
funded amount to the consumer. |
|
|
(5) "Immediate family member" means: |
|
|
(A) a parent, sibling, spouse, grandparent, or |
|
|
grandchild of an individual; or |
|
|
(B) a child related by blood, adoption, or |
|
|
marriage to an individual. |
|
|
(6) "Legal claim" includes: |
|
|
(A) a civil action; |
|
|
(B) an alternative dispute resolution |
|
|
proceeding; or |
|
|
(C) an administrative proceeding before an |
|
|
agency of this state. |
|
|
(7) "Litigation financing agreement" means an |
|
|
agreement under which: |
|
|
(A) money is provided to or on behalf of a |
|
|
consumer by a litigation financing company for a purpose other than |
|
|
prosecuting the consumer's legal claim; and |
|
|
(B) the repayment of the money is in accordance |
|
|
with a litigation financing transaction the terms of which are |
|
|
included as part of the litigation financing agreement. |
|
|
(8) "Litigation financing company" or "company" means |
|
|
a person that enters into a litigation financing agreement with a |
|
|
consumer. |
|
|
(9) "Litigation financing transaction" means a |
|
|
non-recourse transaction in which a litigation financing company |
|
|
purchases, and a consumer assigns to the company, a contingent |
|
|
right to receive an amount of the potential proceeds of a |
|
|
settlement, judgment, award, or verdict obtained in the consumer's |
|
|
legal claim. |
|
|
Sec. 354.002. NONAPPLICABILITY OF CHAPTER. Except as |
|
|
specifically provided by this chapter, this chapter does not apply |
|
|
to the following persons who enter into a litigation financing |
|
|
agreement with a consumer: |
|
|
(1) an immediate family member of the consumer; |
|
|
(2) an accountant who provides accounting services to |
|
|
the consumer; or |
|
|
(3) an attorney who, at the time money is provided to |
|
|
or on behalf of a consumer under a litigation financing agreement, |
|
|
has an attorney-client relationship with the consumer concerning |
|
|
the consumer's legal claim. |
|
|
SUBCHAPTER B. AGREEMENT REQUIREMENTS |
|
|
Sec. 354.051. FORM OF AGREEMENT. A litigation financing |
|
|
agreement must: |
|
|
(1) be in writing; |
|
|
(2) contain the initials of the consumer on each page; |
|
|
and |
|
|
(3) be otherwise complete when presented to the |
|
|
consumer for signature. |
|
|
Sec. 354.052. DISCLOSURES. On the front page of the |
|
|
agreement under appropriate headings, the agreement must disclose: |
|
|
(1) the funded amount to be paid to the consumer by the |
|
|
litigation financing company; |
|
|
(2) an itemization of one-time charges; |
|
|
(3) the total amount to be assigned by the consumer to |
|
|
the company, including the funded amount and all charges; and |
|
|
(4) a payment schedule that: |
|
|
(A) includes the funded amount and charges; and |
|
|
(B) lists all dates and the amount due at the end |
|
|
of each 180-day period from the funding date until the due date of |
|
|
the maximum amount due to the company by the consumer to satisfy the |
|
|
amount owed under the agreement. |
|
|
SECTION 2. The changes in law made by this Act apply only to |
|
|
a litigation financing agreement entered into on or after the |
|
|
effective date of this Act. A litigation financing agreement |
|
|
entered into before the effective date of this Act is governed by |
|
|
the law in effect on the date the agreement was entered into, and |
|
|
the former law is continued in effect for that purpose. |
|
|
SECTION 3. This Act takes effect September 1, 2017. |