S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  8006

                            I N  S E N A T E

                              June 3, 2016
                               ___________

Introduced  by  Sen.  ORTT  --  read twice and ordered printed, and when
  printed to be committed to the Committee on Consumer Protection

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:

  Section 1. The general business law is amended by adding a new article
39-H to read as follows:
                               ARTICLE 39-H
                    THIRD PARTY LITIGATION FINANCING
SECTION 899-CCC. DEFINITIONS.
        899-DDD. CONTRACT REQUIREMENTS.
        899-EEE. PROHIBITIONS.
        899-FFF. REGISTRATION.
        899-GGG. PENALTY FOR VIOLATION.
  S 899-CCC. DEFINITIONS. AS USED IN THIS ARTICLE, THE  FOLLOWING  TERMS
SHALL HAVE THE FOLLOWING MEANINGS:
  1. "CHARGES" SHALL MEAN THE AMOUNT OF MONEY TO BE PAID TO THE CONSUMER
LITIGATION  FUNDING  COMPANY THAT EXCEEDS THE FUNDED AMOUNT OF PRINCIPAL
LOAN.
  2. "CONSUMER LITIGATION FUNDING COMPANY" SHALL MEAN A PERSON OR ENTITY
THAT ENTERS INTO A NON-RECOURSE TRANSACTION WHEREIN THE COMPANY PROVIDES
FUNDS TO A CONSUMER ON THE CONTINGENT RIGHT TO RECEIVE THE FUNDED AMOUNT
AND AGREED UPON CHARGES OBTAINED IN THE EVENT OF A SETTLEMENT,  JUDGMENT
OR AWARD.
  3.  "FUNDED  AMOUNT"  SHALL  MEAN  THE AMOUNT OF MONEY PROVIDED TO THE
CONSUMER IN CONSUMER LITIGATION FINANCING.
  4. "RESOLUTION DATE" SHALL MEAN THE DATE THE FUNDED AMOUNT AND  AGREED
UPON CHARGES ARE DELIVERED TO THE CONSUMER LITIGATION FINANCING COMPANY.
  S  899-DDD.  CONTRACT REQUIREMENTS. 1. CONTRACTS SHALL CONTAIN A RIGHT
OF RESCISSION, ALLOWING THE CONSUMER TO CANCEL THE  CONTRACT  WITHOUT  A
PENALTY  IF  THE  CONSUMER RETURNS THE FULL AMOUNT OF DISBURSED FUNDS TO
THE COMPANY WITHIN TEN BUSINESS DAYS.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD13354-08-6
              

S. 8006                             2

  2. CONTRACTS SHALL CONTAIN A WRITTEN ACKNOWLEDGEMENT BY  THE  ATTORNEY
RETAINED BY THE CONSUMER THAT ATTESTS:
  (A)  THE  ATTORNEY  IS BEING PAID ON A CONTINGENCY BASIS PURSUANT TO A
WRITTEN FEE AGREEMENT; AND
  (B) THE ATTORNEY IS NOT RECEIVING A REFERRAL FEE FROM  THE  LITIGATION
FUNDING COMPANY IN CONNECTION WITH THE CONSUMER'S FUNDING.
  3.  CONTRACTS  SHALL  CLEARLY  OUTLINE  A SCHEDULED FEE STRUCTURE THAT
OUTLINES REPAYMENT TERMS INCLUDING:
  (A) THE FUNDED AMOUNT PLUS CHARGES WRITTEN OUT AS ITEMIZED AMOUNTS;
  (B) THE CHARGES OUTLINED AS A PERCENTAGE AMOUNT EXCEEDING  THE  FUNDED
AMOUNT; AND
  (C) ITEMIZED ONE-TIME FEES INCLUDING PAPERWORK PROCESSING AND ADMINIS-
TRATIVE FEES.
  4.  CONTRACTS SHALL CONTAIN A NO PENALTY PROVISION FOR THE PRE-PAYMENT
OF THE FUNDED AMOUNT PRIOR TO THE SETTLEMENT OF HIS OR  HER  CASE.  SUCH
PROVISION SHALL RELEASE THE CONSUMER FROM ANY OBLIGATION TO SHARE HIS OR
HER SETTLEMENT OR VERDICT.
  S  899-EEE.  PROHIBITIONS.  1.  CONSUMER  LITIGATION FUNDING COMPANIES
SHALL BE PROHIBITED FROM PAYING, ACCEPTING OR OFFERING REFERRAL FEES  OR
ANY  TYPE  OF  CONSIDERATION TO AND FROM ANY MEDICAL PROVIDERS, LICENSED
THERAPISTS OR ATTORNEYS FOR REFERRING A CONSUMER TO THE COMPANY.
  2. THE COMPANY SHALL BE PROHIBITED FROM MAKING ANY INQUIRIES WITH  THE
CONSUMER'S  REPRESENTATIVE  ATTORNEY THAT WOULD VIOLATE THE TERMS OF THE
ATTORNEY-CLIENT PRIVILEGE AT ANY POINT IN TIME.
  3. NO ATTORNEY OR LAW FIRM RETAINED BY A CONSUMER THAT UTILIZES  LITI-
GATION FINANCING MAY HAVE A FINANCIAL INTEREST IN SAID COMPANY.
  4.  CONSUMER  LITIGATION  FUNDING  COMPANIES  SHALL BE PROHIBITED FROM
ATTEMPTING TO OBTAIN, OR OBTAINING A WAIVER OF ANY REMEDY, INCLUDING BUT
NOT LIMITED TO, COMPENSATORY, STATUTORY OR PUNITIVE  DAMAGES,  THAT  THE
CONSUMER MIGHT OTHERWISE HAVE.
  5.  CONSUMER  LITIGATION  FUNDING  COMPANIES  SHALL BE PROHIBITED FROM
ATTEMPTING TO EFFECT ARBITRATION OR OTHERWISE EFFECT WAIVER OF A CONSUM-
ER'S RIGHT TO TRIAL BY JURY FOR COMPLAINTS  ARISING  FROM  THE  CONSUMER
LITIGATION FUNDING TRANSACTION.
  6.  CONSUMER  LITIGATION  FUNDING  COMPANIES  SHALL BE PROHIBITED FROM
ASSIGNING A CONSUMER LITIGATION FUNDING CONTRACT IN WHOLE OR IN PART.
  7. MAXIMUM AMOUNT OF CHARGES:
  (A) THE MAXIMUM AMOUNT OF CHARGES WHICH MAY BE ASSESSED PURSUANT TO  A
CONSUMER  LITIGATION FUNDING CONTRACT SHALL NOT BE IN EXCESS OF THE RATE
PRESCRIBED IN SECTION FOURTEEN-A OF THE BANKING LAW, WHEN EXPRESSED AS A
PROPORTION OF THE FUNDED AMOUNT; AND
  (B) ANY CONSUMER LITIGATION FUNDING CONTRACT WHICH EXCEEDS  SUCH  RATE
SHALL  BE CONSIDERED USURIOUS AS DEFINED BY SECTION 5-501 OF THE GENERAL
OBLIGATIONS LAW.
  S 899-FFF. REGISTRATION. 1. EACH CONSUMER LITIGATION  FUNDING  COMPANY
THAT  WISHES  TO ENGAGE IN BUSINESS IN THE STATE OF NEW YORK SHALL FIRST
REGISTER WITH THE NEW YORK DEPARTMENT OF FINANCIAL SERVICES.
  2. EACH APPLICANT'S REGISTRATION MUST BE FILED IN A MANNER  PRESCRIBED
BY  THE NEW YORK DEPARTMENT OF FINANCIAL SERVICES WITH AN INITIAL ACCOM-
PANIED FEE OF FIVE HUNDRED DOLLARS. REGISTRATIONS MUST BE RENEWED  EVERY
TWO YEARS ON OR BEFORE THE THIRTIETH DAY OF SEPTEMBER.
  3.  THE  NEW YORK DEPARTMENT OF FINANCIAL SERVICES SHALL ISSUE CERTIF-
ICATES OF REGISTRATION AFTER BOTH UNDERSTANDING  AND  ATTESTING  TO  THE
CHARACTER AND FITNESS OF THE APPLICANT COMPANY WITH SUFFICIENT REASON TO
BELIEVE THE COMPANY WILL OPERATE HONESTLY AND FAIRLY.

S. 8006                             3

  S  899-GGG.  PENALTY  FOR VIOLATION. ANY COMPANY FOUND IN VIOLATION OF
ANY PROVISIONS OF THIS ARTICLE IN A SPECIFIC FUNDING  CASE,  WAIVES  ITS
RIGHT  TO RECOVER BOTH THE FUNDED AMOUNT AND ANY ADDITIONAL FEES IN THAT
PARTICULAR CASE.
  S 2. This act shall take effect on the one hundred eightieth day after
it shall have become a law.