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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 22.021 to read as follows: |
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Sec. 22.021. 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 to a person or group of persons who have or will |
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file or prosecute a civil action, including a payment to an attorney |
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who represents the person or group, a payment to a fact or expert |
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witness, a payment of the costs of the civil action, or the |
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provision of funds or credit to be used in the future to support the |
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civil action. The term includes the provision of monetary or |
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in-kind support, regardless of whether the support is called a |
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loan, an advance, a purchase, or another term. |
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(2) "Third-party litigation financing" means the |
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provision of financing with repayment being conditioned on and |
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sourced from the person's or group's proceeds from the civil action, |
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regardless of whether the proceeds are obtained through collection |
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of a judgment, payment of a settlement, or otherwise. The term does |
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not include: |
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(A) an extension of credit to any attorney or law |
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firm when the obligation of the attorney or law firm to repay the |
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loan is required by the loan agreement and is not contingent on the |
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outcome of a specified civil action or portfolio of civil actions; |
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or |
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(B) a contingent fee arrangement between an |
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attorney or law firm and a client. |
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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 the 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 22.021, Government Code, as added by this Act, not |
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later than December 31, 2019. 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, 2019. |