S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                  8653--A
 
                        2017-2018 Regular Sessions
 
                           I N  A S S E M B L Y
 
                             September 1, 2017
                                ___________
 
 Introduced   by  M.  of  A.  MAGNARELLI,  TAYLOR,  VANEL,  COOK,  SIMON,
   SEAWRIGHT, NIOU,  RIVERA,  WRIGHT,  WOERNER,  MAGEE,  D'URSO,  ARROYO,
   LAVINE, JENNE, McDONALD, WILLIAMS, FAHY -- Multi-Sponsored by -- M. of
   A.  DE LA ROSA, SCHIMMINGER -- read once and referred to the Committee
   on Consumer Affairs and Protection -- recommitted to the Committee  on
   in  accordance  with  Assembly Rule 3, sec. 2 -- committee discharged,
   bill amended, ordered reprinted as amended  and  recommitted  to  said
   committee
 
 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.
   §  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 CONSUMER LITIGATION FUNDING CONTRACT TO PROVIDE NON-
 RECOURSE FUNDING OF NO MORE THAN FIVE  HUNDRED  THOUSAND  DOLLARS  TO  A
 CONSUMER.
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD04763-06-8
              

 A. 8653--A                          2
 
   3.  "CONSUMER  LITIGATION  FUNDING  CONTRACT" SHALL MEAN A CONTRACT TO
 PROVIDE NON-RECOURSE FUNDING OF  NO  MORE  THAN  FIVE  HUNDRED  THOUSAND
 DOLLARS  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.
   4.  "FUNDED  AMOUNT"  SHALL  MEAN  THE AMOUNT OF MONEY PROVIDED TO THE
 CONSUMER IN CONSUMER LITIGATION FINANCING.
   5. "RESOLUTION DATE" SHALL MEAN THE DATE THE FUNDED AMOUNT AND  AGREED
 UPON CHARGES ARE DELIVERED TO THE CONSUMER LITIGATION FINANCING COMPANY.
   §  899-DDD.  CONTRACT  REQUIREMENTS.  1.  CONSUMER  LITIGATION FUNDING
 CONTRACTS SHALL CONTAIN A RIGHT OF RESCISSION, ALLOWING THE CONSUMER  TO
 CANCEL THE CONSUMER LITIGATION FUNDING CONTRACT WITHOUT A PENALTY IF THE
 CONSUMER RETURNS THE FULL AMOUNT OF DISBURSED FUNDS TO THE COMPANY WITH-
 IN TEN BUSINESS DAYS.
   2.  CONSUMER  LITIGATION  FUNDING  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. CONSUMER LITIGATION FUNDING CONTRACTS SHALL CLEARLY OUTLINE A SCHE-
 DULED 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.  CONSUMER  LITIGATION  FUNDING CONTRACTS SHALL CONTAIN A NO PENALTY
 PROVISION FOR THE PRE-PAYMENT OF THE FUNDED AMOUNT PRIOR TO THE  SETTLE-
 MENT  OF HIS OR HER CASE. SUCH PROVISION SHALL RELEASE THE CONSUMER FROM
 ANY OBLIGATION TO SHARE HIS OR HER SETTLEMENT OR VERDICT.
   § 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 FOR THE
 PURPOSE OF ENTERING INTO A CONSUMER LITIGATION FUNDING CONTRACT.
   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 WHO HAS ENTERED INTO
 A CONSUMER LITIGATION FUNDING CONTRACT WITH A CONSUMER LITIGATION  FUND-
 ING COMPANY 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 CONTRACT.
   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

 A. 8653--A                          3

 PRESCRIBED IN SECTION 190.42 OF THE PENAL LAW  (CRIMINAL  USURY  IN  THE
 FIRST DEGREE), 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.
   §  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.
   § 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.
   § 2. This act shall take effect on the one hundred eightieth day after
 it shall have become a law.