S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   7655
 
                        2023-2024 Regular Sessions
 
                           I N  A S S E M B L Y
 
                               May 30, 2023
                                ___________
 
 Introduced by M. of A. WALKER -- read once and referred to the Committee
   on Judiciary
 
 AN  ACT to amend the general business law, in relation to consumer liti-
   gation funding
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:

   Section  1.  Short  title. This act shall be known and may be cited as
 the "consumer litigation funding act".
   § 2. Legislative intent. In an effort to promote consumer  protections
 related  to  consumer  litigation  funding transactions, this act estab-
 lishes that such transactions should be subject to state regulation  and
 sets forth requirements regarding disclosure, licensing, funding company
 and  attorney  responsibilities  and  limitations,  violations and other
 items.
   § 3. 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; RIGHT OF RESCISSION.
         899-EEE. PROHIBITIONS AND CHARGE LIMITATIONS.
         899-FFF. CONTRACTED AMOUNTS.
         899-GGG. DISCLOSURES.
         899-HHH. VIOLATIONS.
         899-III. ASSIGNABILITY; LIENS.
         899-JJJ. EFFECT OF COMMUNICATION ON PRIVILEGES.
         899-KKK. REGISTRATION.
         899-LLL. REPORTING.
         899-MMM. SEVERABILITY.
   §  899-CCC.  DEFINITIONS. AS USED IN THIS ARTICLE, THE FOLLOWING TERMS
 SHALL HAVE THE FOLLOWING MEANINGS:
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD11603-01-3
              

 A. 7655                             2
 
   1. "ADVERTISE" MEANS PUBLISHING OR DISSEMINATING  ANY  WRITTEN,  ORAL,
 ELECTRONIC  OR  PRINTED  COMMUNICATION  OR ANY COMMUNICATION BY MEANS OF
 RECORDED TELEPHONE MESSAGES OR TRANSMITTED OR BROADCAST ON RADIO,  TELE-
 VISION,  THE  INTERNET  OR SIMILAR COMMUNICATIONS MEDIA, INCLUDING AUDIO
 RECORDINGS,  FILM STRIPS, MOTION PICTURES AND VIDEOS, PUBLISHED, DISSEM-
 INATED, CIRCULATED OR PLACED BEFORE THE PUBLIC, DIRECTLY OR  INDIRECTLY,
 FOR  THE  PURPOSE  OF INDUCING A CONSUMER TO ENTER INTO A CONSUMER LITI-
 GATION FUNDING.
   2. "CHARGES" MEANS THE AMOUNT OF MONEY TO  BE  PAID  TO  THE  CONSUMER
 LITIGATION  FUNDING  COMPANY  BY OR ON BEHALF OF THE CONSUMER, ABOVE THE
 FUNDED AMOUNT PROVIDED BY OR ON BEHALF OF THE  COMPANY  TO  A  NEW  YORK
 CONSUMER  PURSUANT  TO THIS ARTICLE. CHARGES INCLUDE ALL ADMINISTRATIVE,
 ORIGINATION, UNDERWRITING OR OTHER FEES, INCLUDING INTEREST,  NO  MATTER
 HOW DENOMINATED.
   3.  "CONSUMER  LITIGATION FUNDING" MEANS A NON-RECOURSE TRANSACTION IN
 WHICH A CONSUMER LITIGATION FUNDING 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.
   4. "CONSUMER LITIGATION FUNDING COMPANY" OR "COMPANY" MEANS  A  PERSON
 OR  ENTITY THAT ENTERS INTO A CONSUMER LITIGATION FUNDING CONTRACT OF NO
 MORE THAN FIVE HUNDRED THOUSAND DOLLARS WITH A CONSUMER. THIS TERM SHALL
 NOT INCLUDE:
   (A) AN IMMEDIATE FAMILY MEMBER OF THE CONSUMER;
   (B) A BANK, LENDER, FINANCING ENTITY, OR OTHER SPECIAL PURPOSE ENTITY:
   (I) THAT PROVIDES FINANCING TO A CONSUMER LITIGATION FUNDING  COMPANY;
 OR
   (II)  TO WHICH A CONSUMER LITIGATION FUNDING COMPANY GRANTS A SECURITY
 INTEREST OR TRANSFERS ANY RIGHTS OR INTEREST IN  A  CONSUMER  LITIGATION
 FUNDING; OR
   (C) AN ATTORNEY OR ACCOUNTANT WHO PROVIDES SERVICES TO A CONSUMER.
   5. "CONSUMER" MEANS A NATURAL PERSON WHO HAS A PENDING LEGAL CLAIM AND
 WHO RESIDES OR IS DOMICILED IN NEW YORK.
   6.  "FUNDED  AMOUNT"  MEANS  THE  AMOUNT  OF MONIES PROVIDED TO, OR ON
 BEHALF OF, THE CONSUMER IN  THE  CONSUMER  LITIGATION  FUNDING.  "FUNDED
 AMOUNT" EXCLUDES CHARGES.
   7.  "FUNDING DATE" MEANS THE DATE ON WHICH THE FUNDED AMOUNT IS TRANS-
 FERRED TO THE CONSUMER BY THE CONSUMER LITIGATION FUNDING COMPANY EITHER
 BY PERSONAL DELIVERY OR VIA WIRE,  ACH  OR  OTHER  ELECTRONIC  MEANS  OR
 MAILED BY INSURED, CERTIFIED OR REGISTERED UNITED STATES MAIL.
   8.  "IMMEDIATE FAMILY MEMBER" MEANS A PARENT; SIBLING; CHILD BY BLOOD,
 ADOPTION, OR MARRIAGE; SPOUSE; GRANDPARENT; OR GRANDCHILD.
   9. "LEGAL CLAIM" MEANS A BONA FIDE CIVIL CLAIM OR CAUSE OF ACTION.
   10. "RESOLUTION DATE" MEANS THE  DATE  THE  FUNDED  AMOUNT,  PLUS  THE
 AGREED  UPON  CHARGES,  ARE DELIVERED TO THE CONSUMER LITIGATION FUNDING
 COMPANY BY THE CONSUMER, THE CONSUMER'S ATTORNEY OR OTHERWISE.
   § 899-DDD. CONTRACT REQUIREMENTS; RIGHT OF RESCISSION. 1. ALL CONSUMER
 LITIGATION FUNDING CONTRACTS SHALL MEET THE FOLLOWING REQUIREMENTS:
   (A) A CONTRACT SHALL BE WRITTEN IN A CLEAR AND COHERENT  MANNER  USING
 WORDS  WITH COMMON, EVERYDAY MEANINGS TO ENABLE THE AVERAGE CONSUMER WHO
 MAKES A REASONABLE EFFORT  UNDER  ORDINARY  CIRCUMSTANCES  TO  READ  AND
 UNDERSTAND  THE  TERMS  OF  THE  CONTRACT  WITHOUT  HAVING TO OBTAIN THE
 ASSISTANCE OF A PROFESSIONAL;
   (B) THE CONTRACT SHALL BE COMPLETELY FILLED IN WHEN PRESENTED  TO  THE
 CONSUMER FOR SIGNATURE;
 A. 7655                             3

   (C)  THE  CONTRACT  SHALL  CONTAIN,  IN TWELVE POINT BOLD TYPE FONT, A
 RIGHT OF RESCISSION, ALLOWING THE CONSUMER TO CANCEL THE CONTRACT  WITH-
 OUT PENALTY OR FURTHER OBLIGATION IF, WITHIN TEN BUSINESS DAYS AFTER THE
 FUNDING  DATE,  THE  CONSUMER RETURNS TO THE CONSUMER LITIGATION FUNDING
 COMPANY THE FULL AMOUNT OF THE DISBURSED FUNDS;
   (D)  THE  CONTRACT  SHALL CONTAIN THE INITIALS OF THE CONSUMER ON EACH
 PAGE;
   (E) A STATEMENT THAT THERE ARE NO FEES OR CHARGES TO BE  PAID  BY  THE
 CONSUMER OTHER THAN WHAT IS DISCLOSED ON THE DISCLOSURE FORM;
   (F)  IN  THE EVENT THE CONSUMER SEEKS MORE THAN ONE LITIGATION FUNDING
 CONTRACT FROM THE SAME COMPANY, A DISCLOSURE  PROVIDING  THE  CUMULATIVE
 AMOUNT  DUE  FROM  THE  CONSUMER FOR ALL TRANSACTIONS, INCLUDING CHARGES
 UNDER ALL CONTRACTS, IF REPAYMENT IS MADE ANY TIME AFTER  THE  CONTRACTS
 ARE EXECUTED;
   (G) A STATEMENT OF THE MAXIMUM AMOUNT THE CONSUMER MAY BE OBLIGATED TO
 PAY UNDER THE CONTRACT OTHER THAN IN A CASE OF MATERIAL BREACH, FRAUD OR
 MISREPRESENTATION BY OR ON BEHALF OF THE CONSUMER; AND
   (H)  CLEAR AND CONSPICUOUS DETAIL OF HOW CHARGES, INCLUDING ANY APPLI-
 CABLE FEES, ARE INCURRED OR ACCRUED.
   2. THE CONTRACT SHALL CONTAIN A WRITTEN ACKNOWLEDGEMENT BY THE  ATTOR-
 NEY  RETAINED  BY  THE  CONSUMER  IN THE LEGAL CLAIM THAT ATTESTS TO THE
 FOLLOWING:
   (A) THE ATTORNEY HAS REVIEWED THE  MANDATORY  DISCLOSURES  IN  SECTION
 EIGHT HUNDRED NINETY-NINE-GGG OF THIS ARTICLE WITH THE CONSUMER;
   (B)  THE  ATTORNEY  IS BEING PAID ON A CONTINGENCY BASIS PURSUANT TO A
 WRITTEN FEE AGREEMENT;
   (C) ALL PROCEEDS OF THE LEGAL CLAIM WILL BE DISBURSED VIA  EITHER  THE
 TRUST  ACCOUNT  OF  THE  ATTORNEY  OR  A  SETTLEMENT FUND ESTABLISHED TO
 RECEIVE THE PROCEEDS OF THE LEGAL CLAIM ON BEHALF OF THE CONSUMER;
   (D) THE ATTORNEY IS OBLIGATED TO DISBURSE FUNDS FROM THE  LEGAL  CLAIM
 AND  TAKE  ANY  OTHER  STEPS  TO ENSURE THAT THE TERMS OF THE LITIGATION
 FUNDING CONTRACT ARE FULFILLED;
   (E) THE ATTORNEY HAS NOT RECEIVED A REFERRAL FEE  OR  OTHER  CONSIDER-
 ATION  FROM  THE  CONSUMER LITIGATION FUNDING COMPANY IN CONNECTION WITH
 THE CONSUMER LITIGATION FUNDING, NOR WILL THE ATTORNEY RECEIVE SUCH  FEE
 OR OTHER CONSIDERATION IN THE FUTURE; AND
   (F)  THE  ATTORNEY  IN  THE LEGAL CLAIM HAS PROVIDED NO TAX, PUBLIC OR
 PRIVATE BENEFIT PLANNING, OR  FINANCIAL  ADVICE  REGARDING  THIS  TRANS-
 ACTION.
   3.  IN  THE  EVENT THAT THE ACKNOWLEDGEMENT REQUIRED PURSUANT TO PARA-
 GRAPH (C) OF SUBDIVISION TWO OF THIS SECTION IS  NOT  COMPLETED  BY  THE
 ATTORNEY  OR  FIRM  RETAINED  BY  THE  CONSUMER  IN THE LEGAL CLAIM, THE
 CONTRACT SHALL BE NULL AND VOID. THE CONTRACT  SHALL  REMAIN  VALID  AND
 ENFORCEABLE  IN  THE  EVENT THE CONSUMER TERMINATES THE INITIAL ATTORNEY
 AND/OR RETAINS A NEW ATTORNEY WITH RESPECT TO THE LEGAL CLAIM.
   4. NOTWITHSTANDING PARAGRAPH B OF SUBDIVISION THREE OF  SECTION  5-501
 OF THE GENERAL OBLIGATIONS LAW, NO PREPAYMENT PENALTIES OR FEES SHALL BE
 CHARGED  OR  COLLECTED  ON  CONSUMER  LITIGATION FUNDING.   A PREPAYMENT
 PENALTY ON CONSUMER LITIGATION FUNDING SHALL BE UNENFORCEABLE.
   § 899-EEE. PROHIBITIONS AND CHARGE LIMITATIONS.    1.  CONSUMER  LITI-
 GATION FUNDING COMPANIES SHALL BE PROHIBITED FROM:
   (A)  PAYING  OR  OFFERING  TO PAY COMMISSIONS, REFERRAL FEES, OR OTHER
 FORMS OF CONSIDERATION TO ANY  ATTORNEY,  LAW  FIRM,  MEDICAL  PROVIDER,
 CHIROPRACTOR  OR PHYSICAL THERAPIST OR ANY OF THEIR EMPLOYEES FOR REFER-
 RING A CONSUMER TO THE COMPANY;
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   (B) ACCEPTING ANY COMMISSIONS, REFERRAL FEES, REBATES OR  OTHER  FORMS
 OF  CONSIDERATION  FROM  AN ATTORNEY, LAW FIRM, MEDICAL PROVIDER, CHIRO-
 PRACTOR OR PHYSICAL THERAPIST OR ANY OF THEIR EMPLOYEES;
   (C)  INTENTIONALLY ADVERTISING MATERIALLY FALSE OR MISLEADING INFORMA-
 TION REGARDING ITS PRODUCTS OR SERVICES;
   (D) REFERRING, IN FURTHERANCE OF AN INITIAL LEGAL FUNDING, A  CUSTOMER
 OR  POTENTIAL CUSTOMER TO A SPECIFIC ATTORNEY, LAW FIRM, MEDICAL PROVID-
 ER, CHIROPRACTOR OR  PHYSICAL  THERAPIST  OR  ANY  OF  THEIR  EMPLOYEES;
 PROVIDED, HOWEVER, IF A CUSTOMER NEEDS LEGAL REPRESENTATION, THE COMPANY
 MAY  REFER  THE  CUSTOMER  TO  A LOCAL OR STATE BAR ASSOCIATION REFERRAL
 SERVICE;
   (E) KNOWINGLY PROVIDING FUNDING  TO  A  CONSUMER  WHO  HAS  PREVIOUSLY
 ASSIGNED  AND/OR SOLD A PORTION OF THE CONSUMER'S RIGHT TO PROCEEDS FROM
 HIS OR HER LEGAL CLAIM WITHOUT FIRST MAKING PAYMENT TO AND/OR PURCHASING
 A PRIOR UNSATISFIED CONSUMER LITIGATION FUNDING COMPANY'S ENTIRE  FUNDED
 AMOUNT  AND  CONTRACTED  CHARGES,  UNLESS  A  LESSER AMOUNT IS OTHERWISE
 AGREED TO IN WRITING  BY  THE  CONSUMER  LITIGATION  FUNDING  COMPANIES,
 EXCEPT  THAT  MULTIPLE  COMPANIES MAY AGREE TO CONTEMPORANEOUSLY PROVIDE
 FUNDING TO A CONSUMER PROVIDED THAT  THE  CONSUMER  AND  THE  CONSUMER'S
 ATTORNEY CONSENT TO THE ARRANGEMENT IN WRITING;
   (F)  RECEIVING  ANY RIGHT TO, OR MAKING, ANY DECISIONS WITH RESPECT TO
 THE CONDUCT OF THE UNDERLYING LEGAL CLAIM OR ANY  SETTLEMENT  OR  RESOL-
 UTION THEREOF. THE RIGHT TO MAKE SUCH DECISIONS SHALL REMAIN SOLELY WITH
 THE CONSUMER AND THE ATTORNEY IN THE LEGAL CLAIM;
   (G)  ATTEMPTING  TO  OBTAIN  A  WAIVER  OF  ANY REMEDY OR RIGHT BY THE
 CONSUMER, INCLUDING BUT NOT LIMITED TO THE RIGHT TO TRIAL BY JURY; AND
   (H) KNOWINGLY PAYING OR OFFERING TO PAY FOR COURT COSTS,  FILING  FEES
 OR  ATTORNEY'S  FEES  EITHER DURING OR AFTER THE RESOLUTION OF THE LEGAL
 CLAIM, USING FUNDS FROM THE CONSUMER LITIGATION FUNDING TRANSACTION.
   2. AN ATTORNEY OR LAW FIRM RETAINED BY THE CONSUMER IN THE LEGAL CLAIM
 SHALL NOT HAVE A FINANCIAL INTEREST IN THE CONSUMER  LITIGATION  FUNDING
 COMPANY OFFERING CONSUMER LITIGATION FUNDING TO THAT CONSUMER.
   3.  ANY  ATTORNEY WHO HAS REFERRED THE CONSUMER TO HIS OR HER RETAINED
 ATTORNEY SHALL NOT HAVE A FINANCIAL INTEREST IN THE CONSUMER  LITIGATION
 FUNDING COMPANY OFFERING CONSUMER LITIGATION FUNDING TO THAT CONSUMER.
   4.  THE  ATTORNEY  MAY  ONLY  DISCLOSE  PRIVILEGED  INFORMATION TO THE
 CONSUMER LITIGATION FUNDING COMPANY WITH  THE  WRITTEN  CONSENT  OF  THE
 CONSUMER.
   5.  NOTWITHSTANDING ANY PROVISION OF LAW TO THE CONTRARY, CHARGES PAID
 TO A CONSUMER LITIGATION FUNDING COMPANY BY OR ON BEHALF OF  A  CONSUMER
 UNDER  THIS ARTICLE SHALL NOT EXCEED TWENTY-FIVE PER CENTUM PER ANNUM OR
 ITS EQUIVALENT RATE FOR A LONGER OR SHORTER PERIOD. ANY  CONTRACT  WHICH
 EXCEEDS  SUCH  RATE  SHALL  BE CONSIDERED USURIOUS AS DEFINED BY SECTION
 5-501 OF THE GENERAL OBLIGATIONS LAW.
   § 899-FFF. CONTRACTED AMOUNTS. THE CONTRACTED AMOUNT TO BE PAID TO THE
 CONSUMER LITIGATION FUNDING COMPANY  SHALL  BE  A  PREDETERMINED  AMOUNT
 BASED  UPON  INTERVALS  OF TIME FROM THE FUNDING DATE THROUGH THE RESOL-
 UTION DATE, AND SHALL NOT BE DETERMINED AS A PERCENTAGE OF THE  RECOVERY
 FROM THE LEGAL CLAIM.
   §  899-GGG.  DISCLOSURES.  ALL  CONSUMER  LITIGATION FUNDING CONTRACTS
 SHALL CONTAIN THE DISCLOSURES SPECIFIED IN  THIS  SECTION,  WHICH  SHALL
 CONSTITUTE  MATERIAL  TERMS OF THE CONTRACT. UNLESS OTHERWISE SPECIFIED,
 SUCH DISCLOSURES SHALL BE TYPED IN AT LEAST TWELVE POINT BOLD TYPE  FONT
 AND BE PLACED CLEARLY AND CONSPICUOUSLY WITHIN THE CONTRACT, AS FOLLOWS:
   1. ON THE FRONT PAGE UNDER APPROPRIATE HEADINGS, LANGUAGE SPECIFYING:
 A. 7655                             5
 
   (A) THE FUNDED AMOUNT TO BE PAID TO THE CONSUMER BY THE CONSUMER LITI-
 GATION FUNDING COMPANY;
   (B) AN ITEMIZATION OF ONE-TIME CHARGES;
   (C)  THE  MAXIMUM  TOTAL  AMOUNT TO BE ASSIGNED BY THE CONSUMER TO THE
 COMPANY, INCLUDING THE FUNDED AMOUNT AND ALL CHARGES; AND
   (D) A PAYMENT SCHEDULE TO INCLUDE THE FUNDED AMOUNT AND CHARGES, LIST-
 ING ALL DATES AND THE AMOUNT DUE AT THE END OF EACH ONE  HUNDRED  EIGHTY
 DAY  PERIOD FROM THE FUNDING DATE, UNTIL THE DATE THE MAXIMUM AMOUNT DUE
 TO THE COMPANY PURSUANT TO THE CONTRACT IS PAID.
   2. PURSUANT TO THE PROVISIONS SET FORTH IN THIS  SECTION,  WITHIN  THE
 BODY OF THE CONTRACT:  "CONSUMER'S RIGHT TO CANCELLATION: YOU MAY CANCEL
 THIS  CONTRACT WITHOUT PENALTY OR FURTHER OBLIGATION WITHIN TEN BUSINESS
 DAYS AFTER THE FUNDING DATE IF YOU RETURN  TO  THE  CONSUMER  LITIGATION
 FUNDING COMPANY THE FULL AMOUNT OF THE DISBURSED FUNDS."
   3.  THE  CONSUMER  LITIGATION  FUNDING  COMPANY  SHALL HAVE NO ROLE IN
 DECIDING WHETHER, WHEN AND HOW MUCH THE  LEGAL  CLAIM  IS  SETTLED  FOR,
 HOWEVER, THE CONSUMER AND CONSUMER'S ATTORNEY MUST NOTIFY THE COMPANY OF
 THE  OUTCOME  OF  THE LEGAL CLAIM BY SETTLEMENT OR ADJUDICATION PRIOR TO
 THE RESOLUTION DATE. THE COMPANY MAY SEEK UPDATED INFORMATION ABOUT  THE
 STATUS  OF  THE  LEGAL CLAIM BUT IN NO EVENT SHALL THE COMPANY INTERFERE
 WITH THE INDEPENDENT PROFESSIONAL  JUDGEMENT  OF  THE  ATTORNEY  IN  THE
 HANDLING OF THE LEGAL CLAIM OR ANY SETTLEMENT THEREOF.
   4. WITHIN THE BODY OF THE CONTRACT, IN ALL CAPITAL LETTERS IN AT LEAST
 TWELVE  POINT  BOLD TYPE FONT CONTAINED WITHIN A BOX: "THE FUNDED AMOUNT
 AND AGREED UPON CHARGES SHALL BE PAID ONLY FROM  THE  PROCEEDS  OF  YOUR
 LEGAL  CLAIM, AND SHALL BE PAID ONLY TO THE EXTENT THAT THERE ARE AVAIL-
 ABLE PROCEEDS FROM YOUR LEGAL CLAIM. YOU WILL NOT OWE  (INSERT  NAME  OF
 THE  CONSUMER  LITIGATION  FUNDING  COMPANY)  ANYTHING  IF  THERE ARE NO
 PROCEEDS FROM YOUR LEGAL CLAIM, UNLESS YOU HAVE  VIOLATED  ANY  MATERIAL
 TERM  OF  THIS CONTRACT OR YOU HAVE COMMITTED FRAUD AGAINST (INSERT NAME
 OF CONSUMER LITIGATION FUNDING COMPANY)."
   5. LOCATED IMMEDIATELY ABOVE THE  PLACE  ON  THE  CONTRACT  WHERE  THE
 CONSUMER'S  SIGNATURE  IS  REQUIRED, IN TWELVE POINT BOLD TYPE FONT: "DO
 NOT SIGN THIS CONTRACT BEFORE YOU READ IT COMPLETELY.  DO NOT SIGN  THIS
 CONTRACT  IF  IT  CONTAINS  ANY  BLANK  SPACES.  YOU  ARE  ENTITLED TO A
 COMPLETELY FILLED-IN COPY OF THE CONTRACT BEFORE YOU SIGN THIS CONTRACT.
 YOU SHOULD OBTAIN THE ADVICE OF ANY ATTORNEY.  DEPENDING ON THE  CIRCUM-
 STANCES, YOU MAY WANT TO CONSULT A TAX, PUBLIC OR PRIVATE BENEFITS PLAN-
 NING,  OR  FINANCIAL PROFESSIONAL. YOU ACKNOWLEDGE THAT YOUR ATTORNEY IN
 THE LEGAL CLAIM HAS PROVIDED NO TAX, PUBLIC OR PRIVATE BENEFIT PLANNING,
 OR FINANCIAL ADVICE REGARDING THIS TRANSACTION.  YOU FURTHER ACKNOWLEDGE
 THAT YOUR ATTORNEY HAS EXPLAINED THE TERMS AND CONDITIONS OF THE CONSUM-
 ER LITIGATION FUNDING CONTRACT."
   6. A COPY OF THE EXECUTED CONTRACT SHALL PROMPTLY BE DELIVERED TO  THE
 ATTORNEY FOR THE CONSUMER.
   §  899-HHH.  VIOLATIONS.  1.  ANY  CONSUMER LITIGATION FUNDING COMPANY
 FOUND IN WILLFUL VIOLATION OF ANY PROVISION OF THIS ARTICLE IN A SPECIF-
 IC FUNDING CASE: (A) WAIVES ITS RIGHT TO RECOVER BOTH THE FUNDED  AMOUNT
 AND  ANY AND ALL CHARGES, AS DEFINED IN SUBDIVISION TWO OF SECTION EIGHT
 HUNDRED NINETY-NINE-CCC OF THIS ARTICLE, IN THAT  PARTICULAR  CASE;  AND
 (B)  SHALL  BE LIABLE FOR A CIVIL PENALTY OF NOT MORE THAN FIVE THOUSAND
 DOLLARS FOR EACH VIOLATION, WHICH SHALL ACCRUE TO THE STATE OF NEW  YORK
 AND MAY BE RECOVERED IN A CIVIL ACTION BROUGHT BY THE ATTORNEY GENERAL.
   2. NOTHING IN THIS ARTICLE SHALL BE CONSTRUED TO RESTRICT THE EXERCISE
 OF  POWERS OR THE PERFORMANCE OF THE DUTIES OF THE NEW YORK STATE ATTOR-
 A. 7655                             6
 
 NEY GENERAL, WHICH HE OR SHE IS AUTHORIZED TO  EXERCISE  OR  PERFORM  BY
 LAW.
   § 899-III. ASSIGNABILITY; LIENS. 1. THE CONTINGENT RIGHT TO RECEIVE AN
 AMOUNT  OF  THE  POTENTIAL  PROCEEDS OF A LEGAL CLAIM IS ASSIGNABLE BY A
 CONSUMER.
   2. ONLY ATTORNEY'S LIENS RELATED TO  THE  LEGAL  CLAIM  WHICH  IS  THE
 SUBJECT OF THE CONSUMER LITIGATION FUNDING OR MEDICARE OR OTHER STATUTO-
 RY LIENS RELATED TO THE LEGAL CLAIM SHALL TAKE PRIORITY OVER ANY LIEN OF
 THE  CONSUMER  LITIGATION  FUNDING  COMPANY.  ALL OTHER LIENS SHALL TAKE
 PRIORITY BY NORMAL OPERATION OF LAW.
   § 899-JJJ. EFFECT OF COMMUNICATION ON  PRIVILEGES.  ALL  COMMUNICATION
 BETWEEN  THE  CONSUMER'S  ATTORNEY  IN  THE LEGAL CLAIM AND THE CONSUMER
 LEGAL FUNDING COMPANY AS IT PERTAINS TO THE CONSUMER LEGAL FUNDING SHALL
 FALL WITHIN THE SCOPE OF THE ATTORNEY CLIENT PRIVILEGE, INCLUDING, WITH-
 OUT LIMITATION, THE WORK-PRODUCT DOCTRINE.
   § 899-KKK. REGISTRATION.  1.  UNLESS  A  CONSUMER  LITIGATION  FUNDING
 COMPANY HAS FIRST REGISTERED WITH THE STATE OF NEW YORK PURSUANT TO THIS
 ARTICLE,  THE  COMPANY  MAY NOT ENGAGE IN THE BUSINESS OF CONSUMER LITI-
 GATION FUNDING IN THIS STATE.
   2. AN APPLICANT'S REGISTRATION MUST BE FILED IN THE MANNER  PRESCRIBED
 BY  THE SECRETARY OF STATE AND MUST CONTAIN ALL THE INFORMATION REQUIRED
 BY THE DEPARTMENT OF STATE TO MAKE AN EVALUATION OF  THE  CHARACTER  AND
 FITNESS OF THE APPLICANT COMPANY. THE INITIAL APPLICATION MUST BE ACCOM-
 PANIED BY A FIVE HUNDRED DOLLAR FEE. A RENEWAL REGISTRATION MUST INCLUDE
 A TWO HUNDRED DOLLAR FEE. A REGISTRATION MUST BE RENEWED EVERY TWO YEARS
 AND EXPIRES ON THE THIRTIETH OF SEPTEMBER.
   3.  A CERTIFICATE OF REGISTRATION MAY NOT BE ISSUED UNLESS THE DEPART-
 MENT OF STATE, UPON INVESTIGATION, FINDS THAT THE CHARACTER AND  FITNESS
 OF THE APPLICANT COMPANY, AND OF THE OFFICERS AND DIRECTORS THEREOF, ARE
 SUCH  AS  TO  WARRANT BELIEF THAT THE BUSINESS WILL BE OPERATED HONESTLY
 AND FAIRLY WITHIN THE PURPOSES OF THIS ARTICLE.
   4. EVERY REGISTRANT SHALL ALSO, AT THE TIME OF  FILING  SUCH  APPLICA-
 TION,  FILE  WITH THE DEPARTMENT OF STATE, IF THE DEPARTMENT OF STATE SO
 REQUIRES, A BOND SATISFACTORY TO THE DEPARTMENT OF STATE  IN  AN  AMOUNT
 NOT  TO EXCEED FIFTY THOUSAND DOLLARS. IN LIEU OF THE BOND AT THE OPTION
 OF THE REGISTRANT, THE REGISTRANT MAY  POST  AN  IRREVOCABLE  LETTER  OF
 CREDIT.  THE  TERMS  OF  THE BOND MUST RUN CONCURRENT WITH THE PERIOD OF
 TIME DURING WHICH THE REGISTRATION WILL BE  IN  EFFECT.  THE  BOND  MUST
 PROVIDE  THAT THE REGISTRANT WILL FAITHFULLY CONFORM TO AND ABIDE BY THE
 PROVISIONS OF THIS ARTICLE AND TO ALL RULES LAWFULLY MADE BY THE  ADMIN-
 ISTRATOR  UNDER  THIS  ACT AND TO ANY SUCH PERSON OR PERSONS ANY AND ALL
 AMOUNTS OF MONEY THAT MAY BECOME DUE OR OWING TO THE STATE  OR  TO  SUCH
 PERSON  OR PERSONS FROM THE REGISTRANT UNDER AND BY VIRTUE OF THIS ARTI-
 CLE DURING THE PERIOD FOR WHICH THE BOND IS GIVEN.
   5. UPON WRITTEN REQUEST, THE APPLICANT SHALL BE ENTITLED TO A  HEARING
 ON THE QUESTION OF THE APPLICANT'S QUALIFICATIONS FOR REGISTRATION IF:
   (A) THE DEPARTMENT OF STATE HAS NOTIFIED THE APPLICANT IN WRITING THAT
 THE APPLICATION HAS BEEN DENIED, OR
   (B) THE DEPARTMENT OF STATE HAS NOT ISSUED A REGISTRATION WITHIN SIXTY
 DAYS AFTER THE APPLICATION FOR THE REGISTRATION WAS FILED.
   6.  A  REQUEST  FOR  A  HEARING MAY NOT BE MADE MORE THAN FIFTEEN DAYS
 AFTER THE DEPARTMENT HAS MAILED A WRITTEN NOTICE TO THE  APPLICANT  THAT
 THE  APPLICATION HAS BEEN DENIED AND STATING IN SUBSTANCE THE DEPARTMENT
 OF STATE'S FINDINGS SUPPORTING DENIAL OF THE APPLICATION.
   7. NOTWITHSTANDING THE PRIOR APPROVAL REQUIREMENT OF  SUBDIVISION  ONE
 OF  THIS  SECTION, A CONSUMER LITIGATION FUNDING COMPANY THAT REGISTERED
 A. 7655                             7

 WITH THE DEPARTMENT OF STATE BETWEEN THE EFFECTIVE DATE OF THIS  ARTICLE
 OR  WHEN  THE DEPARTMENT OF STATE HAS MADE APPLICATIONS AVAILABLE TO THE
 PUBLIC, WHICHEVER IS LATER, AND ONE HUNDRED EIGHTY DAYS  THEREAFTER  MAY
 ENGAGE  IN  CONSUMER LITIGATION FUNDING WHILE THE COMPANY'S REGISTRATION
 IS PENDING APPROVAL WITH THE DEPARTMENT OF STATE. ALL FUNDING AGREEMENTS
 ENTERED INTO PRIOR TO THE EFFECTIVE DATE OF THIS ARTICLE ARE NOT SUBJECT
 TO THE TERMS OF THIS ARTICLE.
   8. NO CONSUMER LITIGATION FUNDING COMPANY MAY USE ANY FORM OF CONSUMER
 LITIGATION FUNDING CONTRACT IN THIS STATE UNLESS IT HAS BEEN FILED  WITH
 THE  DEPARTMENT  OF  STATE  IN ACCORDANCE WITH THE FILING PROCEDURES SET
 FORTH BY THE SECRETARY OF STATE.
   9. THE SECRETARY OF STATE IS HEREBY  AUTHORIZED  TO  ADOPT  RULES  AND
 REGULATIONS TO IMPLEMENT THE PROVISIONS OF THIS SECTION AS NEEDED.
   § 899-LLL. REPORTING. 1. EACH CONSUMER LITIGATION FUNDING COMPANY THAT
 ENGAGES IN BUSINESS IN THE STATE SHALL SUBMIT A REPORT TO THE DEPARTMENT
 OF STATE NO LATER THAN THE THIRTY-FIRST OF JANUARY OF EACH YEAR SPECIFY-
 ING:
   (A) NUMBER OF CONSUMER LITIGATION FUNDINGS BY THE COMPANY;
   (B) SUMMATION OF FUNDED AMOUNTS IN DOLLAR FIGURE; AND
   (C)  ANNUAL  PERCENTAGE  CHARGED  TO EACH CONSUMER WHERE REPAYMENT WAS
 MADE.
   2. THE DEPARTMENT OF STATE SHALL MAKE SUCH  INFORMATION  AVAILABLE  TO
 THE  PUBLIC, IN A MANNER WHICH MAINTAINS THE CONFIDENTIALITY OF THE NAME
 OF EACH COMPANY AND CONSUMER,  NO  LATER  THAN  NINETY  DAYS  AFTER  THE
 REPORTS ARE SUBMITTED.
   §  899-MMM. SEVERABILITY. IF ANY PROVISION OF THIS ARTICLE IS, FOR ANY
 REASON, DECLARED UNCONSTITUTIONAL OR INVALID, IN WHOLE OR  IN  PART,  BY
 ANY COURT OF COMPETENT JURISDICTION, SUCH PORTION SHALL BE DEEMED SEVER-
 ABLE,  AND  SUCH  UNCONSTITUTIONALITY OR INVALIDITY SHALL NOT AFFECT THE
 VALIDITY OF THE REMAINING PORTIONS  OF  THIS  ARTICLE,  WHICH  REMAINING
 PORTIONS SHALL CONTINUE IN FULL FORCE AND EFFECT.
   § 4. This act shall take effect on the one hundred eightieth day after
 it  shall have become a law; provided, however, it shall not apply or in
 any way affect or invalidate any consumer litigation funding  previously
 effectuated prior to the effective date of this act.

                             
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                  7655--A
 
                        2023-2024 Regular Sessions
 
                           I N  A S S E M B L Y
 
                               May 30, 2023
                                ___________
 
 Introduced by M. of A. WALKER -- read once and referred to the Committee
   on  Judiciary -- committee discharged, bill amended, ordered reprinted
   as amended and recommitted to said committee
 
 AN ACT to amend the general business law, in relation to consumer  liti-
   gation funding

   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Short title. This act shall be known and may  be  cited  as
 the "consumer litigation funding act".
   §  2. Legislative intent. In an effort to promote consumer protections
 related to consumer litigation funding  transactions,  this  act  estab-
 lishes  that such transactions should be subject to state regulation and
 sets forth requirements regarding disclosure, licensing, funding company
 and attorney responsibilities  and  limitations,  violations  and  other
 items.
   §  3. 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; RIGHT OF RESCISSION.
         899-EEE. PROHIBITIONS AND CHARGE LIMITATIONS.
         899-FFF. CONTRACTED AMOUNTS.
         899-GGG. DISCLOSURES.
         899-HHH. VIOLATIONS.
         899-III. ASSIGNABILITY; LIENS.
         899-JJJ. EFFECT OF COMMUNICATION ON PRIVILEGES.
         899-KKK. REGISTRATION.
         899-LLL. REPORTING.
         899-MMM. SEVERABILITY.
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD11603-02-3
 A. 7655--A                          2
              

 
   § 899-CCC. DEFINITIONS. AS USED IN THIS ARTICLE, THE  FOLLOWING  TERMS
 SHALL HAVE THE FOLLOWING MEANINGS:
   1.  "ADVERTISE"  MEANS  PUBLISHING OR DISSEMINATING ANY WRITTEN, ORAL,
 ELECTRONIC OR PRINTED COMMUNICATION OR ANY  COMMUNICATION  BY  MEANS  OF
 RECORDED  TELEPHONE MESSAGES OR TRANSMITTED OR BROADCAST ON RADIO, TELE-
 VISION, THE INTERNET OR SIMILAR COMMUNICATIONS  MEDIA,  INCLUDING  AUDIO
 RECORDINGS,  FILM STRIPS, MOTION PICTURES AND VIDEOS, PUBLISHED, DISSEM-
 INATED, CIRCULATED OR PLACED BEFORE THE PUBLIC, DIRECTLY OR  INDIRECTLY,
 FOR  THE  PURPOSE  OF INDUCING A CONSUMER TO ENTER INTO A CONSUMER LITI-
 GATION FUNDING.
   2. "CHARGES" MEANS THE AMOUNT OF MONEY TO  BE  PAID  TO  THE  CONSUMER
 LITIGATION  FUNDING  COMPANY  BY OR ON BEHALF OF THE CONSUMER, ABOVE THE
 FUNDED AMOUNT PROVIDED BY OR ON BEHALF OF THE  COMPANY  TO  A  NEW  YORK
 CONSUMER  PURSUANT  TO THIS ARTICLE. CHARGES INCLUDE ALL ADMINISTRATIVE,
 ORIGINATION, UNDERWRITING OR OTHER FEES, INCLUDING INTEREST,  NO  MATTER
 HOW  DENOMINATED.  SUCH  CHARGES   SHALL   NOT EXCEED THE MAXIMUM ANNUAL
 PERCENTAGE RATE APPLICABLE TO CONSUMER CREDIT EXTENDED TO  A  MEMBER  OF
 THE  MILITARY  AS PROVIDED   FOR IN   TITLE   10,  UNITED  STATES  CODE,
 SECTION 987(B). ANY CONTRACT WHICH EXCEEDS SUCH RATE SHALL BE CONSIDERED
 USURIOUS  AS DEFINED  BY  SECTION 5-501 OF THE GENERAL OBLIGATIONS LAW.
   3. "CONSUMER LITIGATION FUNDING" MEANS A NON-RECOURSE  TRANSACTION  IN
 WHICH  A  CONSUMER  LITIGATION  FUNDING 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.
   4.  "CONSUMER  LITIGATION FUNDING COMPANY" OR "COMPANY" MEANS A PERSON
 OR ENTITY THAT ENTERS INTO A CONSUMER LITIGATION FUNDING CONTRACT OF  NO
 MORE THAN FIVE HUNDRED THOUSAND DOLLARS WITH A CONSUMER. THIS TERM SHALL
 NOT INCLUDE:
   (A) AN IMMEDIATE FAMILY MEMBER OF THE CONSUMER;
   (B) A BANK, LENDER, FINANCING ENTITY, OR OTHER SPECIAL PURPOSE ENTITY:
   (I)  THAT PROVIDES FINANCING TO A CONSUMER LITIGATION FUNDING COMPANY;
 OR
   (II) TO WHICH A CONSUMER LITIGATION FUNDING COMPANY GRANTS A  SECURITY
 INTEREST  OR  TRANSFERS  ANY RIGHTS OR INTEREST IN A CONSUMER LITIGATION
 FUNDING; OR
   (C) AN ATTORNEY OR ACCOUNTANT WHO PROVIDES SERVICES TO A CONSUMER.
   5. "CONSUMER" MEANS A NATURAL PERSON WHO HAS A PENDING LEGAL CLAIM AND
 WHO RESIDES OR IS DOMICILED IN NEW YORK.
   6. "FUNDED AMOUNT" MEANS THE AMOUNT  OF  MONIES  PROVIDED  TO,  OR  ON
 BEHALF  OF,  THE  CONSUMER  IN  THE CONSUMER LITIGATION FUNDING. "FUNDED
 AMOUNT" EXCLUDES CHARGES.
   7. "FUNDING DATE" MEANS THE DATE ON WHICH THE FUNDED AMOUNT IS  TRANS-
 FERRED TO THE CONSUMER BY THE CONSUMER LITIGATION FUNDING COMPANY EITHER
 BY  PERSONAL  DELIVERY  OR  VIA  WIRE,  ACH OR OTHER ELECTRONIC MEANS OR
 MAILED BY INSURED, CERTIFIED OR REGISTERED UNITED STATES MAIL.
   8. "IMMEDIATE FAMILY MEMBER" MEANS A PARENT; SIBLING; CHILD BY  BLOOD,
 ADOPTION, OR MARRIAGE; SPOUSE; GRANDPARENT; OR GRANDCHILD.
   9. "LEGAL CLAIM" MEANS A BONA FIDE CIVIL CLAIM OR CAUSE OF ACTION.
   10.  "RESOLUTION  DATE"  MEANS  THE  DATE  THE FUNDED AMOUNT, PLUS THE
 AGREED UPON CHARGES, ARE DELIVERED TO THE  CONSUMER  LITIGATION  FUNDING
 COMPANY BY THE CONSUMER, THE CONSUMER'S ATTORNEY OR OTHERWISE.
   § 899-DDD. CONTRACT REQUIREMENTS; RIGHT OF RESCISSION. 1. ALL CONSUMER
 LITIGATION FUNDING CONTRACTS SHALL MEET THE FOLLOWING REQUIREMENTS:
   (A)  A  CONTRACT SHALL BE WRITTEN IN A CLEAR AND COHERENT MANNER USING
 WORDS WITH COMMON, EVERYDAY MEANINGS TO ENABLE THE AVERAGE CONSUMER  WHO
 A. 7655--A                          3
 
 MAKES  A  REASONABLE  EFFORT  UNDER  ORDINARY  CIRCUMSTANCES TO READ AND
 UNDERSTAND THE TERMS OF  THE  CONTRACT  WITHOUT  HAVING  TO  OBTAIN  THE
 ASSISTANCE OF A PROFESSIONAL;
   (B)  THE  CONTRACT SHALL BE COMPLETELY FILLED IN WHEN PRESENTED TO THE
 CONSUMER FOR SIGNATURE;
   (C) THE CONTRACT SHALL CONTAIN, IN TWELVE  POINT  BOLD  TYPE  FONT,  A
 RIGHT  OF RESCISSION, ALLOWING THE CONSUMER TO CANCEL THE CONTRACT WITH-
 OUT PENALTY OR FURTHER OBLIGATION IF, WITHIN TEN BUSINESS DAYS AFTER THE
 FUNDING DATE, THE CONSUMER RETURNS TO THE  CONSUMER  LITIGATION  FUNDING
 COMPANY THE FULL AMOUNT OF THE DISBURSED FUNDS;
   (D)  THE  CONTRACT  SHALL CONTAIN THE INITIALS OF THE CONSUMER ON EACH
 PAGE;
   (E) A STATEMENT THAT THERE ARE NO FEES OR CHARGES TO BE  PAID  BY  THE
 CONSUMER OTHER THAN WHAT IS DISCLOSED ON THE DISCLOSURE FORM;
   (F)  IN  THE EVENT THE CONSUMER SEEKS MORE THAN ONE LITIGATION FUNDING
 CONTRACT FROM THE SAME COMPANY, A DISCLOSURE  PROVIDING  THE  CUMULATIVE
 AMOUNT  DUE  FROM  THE  CONSUMER FOR ALL TRANSACTIONS, INCLUDING CHARGES
 UNDER ALL CONTRACTS, IF REPAYMENT IS MADE ANY TIME AFTER  THE  CONTRACTS
 ARE EXECUTED;
   (G) A STATEMENT OF THE MAXIMUM AMOUNT THE CONSUMER MAY BE OBLIGATED TO
 PAY UNDER THE CONTRACT OTHER THAN IN A CASE OF MATERIAL BREACH, FRAUD OR
 MISREPRESENTATION BY OR ON BEHALF OF THE CONSUMER; AND
   (H)  CLEAR AND CONSPICUOUS DETAIL OF HOW CHARGES, INCLUDING ANY APPLI-
 CABLE FEES, ARE INCURRED OR ACCRUED.
   2. THE CONTRACT SHALL CONTAIN A WRITTEN ACKNOWLEDGEMENT BY THE  ATTOR-
 NEY  RETAINED  BY  THE  CONSUMER  IN THE LEGAL CLAIM THAT ATTESTS TO THE
 FOLLOWING:
   (A) THE ATTORNEY HAS REVIEWED THE  MANDATORY  DISCLOSURES  IN  SECTION
 EIGHT HUNDRED NINETY-NINE-GGG OF THIS ARTICLE WITH THE CONSUMER;
   (B)  THE  ATTORNEY  IS BEING PAID ON A CONTINGENCY BASIS PURSUANT TO A
 WRITTEN FEE AGREEMENT;
   (C) ALL PROCEEDS OF THE LEGAL CLAIM WILL BE DISBURSED VIA  EITHER  THE
 TRUST  ACCOUNT  OF  THE  ATTORNEY  OR  A  SETTLEMENT FUND ESTABLISHED TO
 RECEIVE THE PROCEEDS OF THE LEGAL CLAIM ON BEHALF OF THE CONSUMER;
   (D) THE ATTORNEY IS OBLIGATED TO DISBURSE FUNDS FROM THE  LEGAL  CLAIM
 AND  TAKE  ANY  OTHER  STEPS  TO ENSURE THAT THE TERMS OF THE LITIGATION
 FUNDING CONTRACT ARE FULFILLED;
   (E) THE ATTORNEY HAS NOT RECEIVED A REFERRAL FEE  OR  OTHER  CONSIDER-
 ATION  FROM  THE  CONSUMER LITIGATION FUNDING COMPANY IN CONNECTION WITH
 THE CONSUMER LITIGATION FUNDING, NOR WILL THE ATTORNEY RECEIVE SUCH  FEE
 OR OTHER CONSIDERATION IN THE FUTURE; AND
   (F)  THE  ATTORNEY  IN  THE LEGAL CLAIM HAS PROVIDED NO TAX, PUBLIC OR
 PRIVATE BENEFIT PLANNING, OR  FINANCIAL  ADVICE  REGARDING  THIS  TRANS-
 ACTION.
   3.  IN  THE  EVENT THAT THE ACKNOWLEDGEMENT REQUIRED PURSUANT TO PARA-
 GRAPH (C) OF SUBDIVISION TWO OF THIS SECTION IS  NOT  COMPLETED  BY  THE
 ATTORNEY  OR  FIRM  RETAINED  BY  THE  CONSUMER  IN THE LEGAL CLAIM, THE
 CONTRACT SHALL BE NULL AND VOID. THE CONTRACT  SHALL  REMAIN  VALID  AND
 ENFORCEABLE  IN  THE  EVENT THE CONSUMER TERMINATES THE INITIAL ATTORNEY
 AND/OR RETAINS A NEW ATTORNEY WITH RESPECT TO THE LEGAL CLAIM.
   4. NOTWITHSTANDING PARAGRAPH B OF SUBDIVISION THREE OF  SECTION  5-501
 OF THE GENERAL OBLIGATIONS LAW, NO PREPAYMENT PENALTIES OR FEES SHALL BE
 CHARGED  OR  COLLECTED  ON  CONSUMER  LITIGATION FUNDING.   A PREPAYMENT
 PENALTY ON CONSUMER LITIGATION FUNDING SHALL BE UNENFORCEABLE.
   § 899-EEE. PROHIBITIONS AND CHARGE LIMITATIONS.    1.  CONSUMER  LITI-
 GATION FUNDING COMPANIES SHALL BE PROHIBITED FROM:
 A. 7655--A                          4
 
   (A)  PAYING  OR  OFFERING  TO PAY COMMISSIONS, REFERRAL FEES, OR OTHER
 FORMS OF CONSIDERATION TO ANY  ATTORNEY,  LAW  FIRM,  MEDICAL  PROVIDER,
 CHIROPRACTOR  OR PHYSICAL THERAPIST OR ANY OF THEIR EMPLOYEES FOR REFER-
 RING A CONSUMER TO THE COMPANY;
   (B)  ACCEPTING  ANY COMMISSIONS, REFERRAL FEES, REBATES OR OTHER FORMS
 OF CONSIDERATION FROM AN ATTORNEY, LAW FIRM,  MEDICAL  PROVIDER,  CHIRO-
 PRACTOR OR PHYSICAL THERAPIST OR ANY OF THEIR EMPLOYEES;
   (C)  INTENTIONALLY ADVERTISING MATERIALLY FALSE OR MISLEADING INFORMA-
 TION REGARDING ITS PRODUCTS OR SERVICES;
   (D) REFERRING, IN FURTHERANCE OF AN INITIAL LEGAL FUNDING, A  CUSTOMER
 OR  POTENTIAL CUSTOMER TO A SPECIFIC ATTORNEY, LAW FIRM, MEDICAL PROVID-
 ER, CHIROPRACTOR OR  PHYSICAL  THERAPIST  OR  ANY  OF  THEIR  EMPLOYEES;
 PROVIDED, HOWEVER, IF A CUSTOMER NEEDS LEGAL REPRESENTATION, THE COMPANY
 MAY  REFER  THE  CUSTOMER  TO  A LOCAL OR STATE BAR ASSOCIATION REFERRAL
 SERVICE;
   (E) KNOWINGLY PROVIDING FUNDING  TO  A  CONSUMER  WHO  HAS  PREVIOUSLY
 ASSIGNED  AND/OR SOLD A PORTION OF THE CONSUMER'S RIGHT TO PROCEEDS FROM
 HIS OR HER LEGAL CLAIM WITHOUT FIRST MAKING PAYMENT TO AND/OR PURCHASING
 A PRIOR UNSATISFIED CONSUMER LITIGATION FUNDING COMPANY'S ENTIRE  FUNDED
 AMOUNT  AND  CONTRACTED  CHARGES,  UNLESS  A  LESSER AMOUNT IS OTHERWISE
 AGREED TO IN WRITING  BY  THE  CONSUMER  LITIGATION  FUNDING  COMPANIES,
 EXCEPT  THAT  MULTIPLE  COMPANIES MAY AGREE TO CONTEMPORANEOUSLY PROVIDE
 FUNDING TO A CONSUMER PROVIDED THAT  THE  CONSUMER  AND  THE  CONSUMER'S
 ATTORNEY CONSENT TO THE ARRANGEMENT IN WRITING;
   (F)  RECEIVING  ANY RIGHT TO, OR MAKING, ANY DECISIONS WITH RESPECT TO
 THE CONDUCT OF THE UNDERLYING LEGAL CLAIM OR ANY  SETTLEMENT  OR  RESOL-
 UTION THEREOF. THE RIGHT TO MAKE SUCH DECISIONS SHALL REMAIN SOLELY WITH
 THE CONSUMER AND THE ATTORNEY IN THE LEGAL CLAIM;
   (G)  ATTEMPTING  TO  OBTAIN  A  WAIVER  OF  ANY REMEDY OR RIGHT BY THE
 CONSUMER, INCLUDING BUT NOT LIMITED TO THE RIGHT TO TRIAL BY JURY; AND
   (H) KNOWINGLY PAYING OR OFFERING TO PAY FOR COURT COSTS,  FILING  FEES
 OR  ATTORNEY'S  FEES  EITHER DURING OR AFTER THE RESOLUTION OF THE LEGAL
 CLAIM, USING FUNDS FROM THE CONSUMER LITIGATION FUNDING TRANSACTION.
   2. AN ATTORNEY OR LAW FIRM RETAINED BY THE CONSUMER IN THE LEGAL CLAIM
 SHALL NOT HAVE A FINANCIAL INTEREST IN THE CONSUMER  LITIGATION  FUNDING
 COMPANY OFFERING CONSUMER LITIGATION FUNDING TO THAT CONSUMER.
   3.  ANY  ATTORNEY WHO HAS REFERRED THE CONSUMER TO HIS OR HER RETAINED
 ATTORNEY SHALL NOT HAVE A FINANCIAL INTEREST IN THE CONSUMER  LITIGATION
 FUNDING COMPANY OFFERING CONSUMER LITIGATION FUNDING TO THAT CONSUMER.
   4.  THE  ATTORNEY  MAY  ONLY  DISCLOSE  PRIVILEGED  INFORMATION TO THE
 CONSUMER LITIGATION FUNDING COMPANY WITH  THE  WRITTEN  CONSENT  OF  THE
 CONSUMER.
   § 899-FFF. CONTRACTED AMOUNTS. THE CONTRACTED AMOUNT TO BE PAID TO THE
 CONSUMER  LITIGATION  FUNDING  COMPANY  SHALL  BE A PREDETERMINED AMOUNT
 BASED UPON INTERVALS OF TIME FROM THE FUNDING DATE  THROUGH  THE  RESOL-
 UTION  DATE, AND SHALL NOT BE DETERMINED AS A PERCENTAGE OF THE RECOVERY
 FROM THE LEGAL CLAIM.
   § 899-GGG. DISCLOSURES.  ALL  CONSUMER  LITIGATION  FUNDING  CONTRACTS
 SHALL  CONTAIN  THE  DISCLOSURES  SPECIFIED IN THIS SECTION, WHICH SHALL
 CONSTITUTE MATERIAL TERMS OF THE CONTRACT. UNLESS  OTHERWISE  SPECIFIED,
 SUCH  DISCLOSURES SHALL BE TYPED IN AT LEAST TWELVE POINT BOLD TYPE FONT
 AND BE PLACED CLEARLY AND CONSPICUOUSLY WITHIN THE CONTRACT, AS FOLLOWS:
   1. ON THE FRONT PAGE UNDER APPROPRIATE HEADINGS, LANGUAGE SPECIFYING:
   (A) THE FUNDED AMOUNT TO BE PAID TO THE CONSUMER BY THE CONSUMER LITI-
 GATION FUNDING COMPANY;
   (B) AN ITEMIZATION OF ONE-TIME CHARGES;
 A. 7655--A                          5
 
   (C) THE MAXIMUM TOTAL AMOUNT TO BE ASSIGNED BY  THE  CONSUMER  TO  THE
 COMPANY, INCLUDING THE FUNDED AMOUNT AND ALL CHARGES; AND
   (D) A PAYMENT SCHEDULE TO INCLUDE THE FUNDED AMOUNT AND CHARGES, LIST-
 ING  ALL  DATES AND THE AMOUNT DUE AT THE END OF EACH ONE HUNDRED EIGHTY
 DAY PERIOD FROM THE FUNDING DATE, UNTIL THE DATE THE MAXIMUM AMOUNT  DUE
 TO THE COMPANY PURSUANT TO THE CONTRACT IS PAID.
   2.  PURSUANT  TO  THE PROVISIONS SET FORTH IN THIS SECTION, WITHIN THE
 BODY OF THE CONTRACT:  "CONSUMER'S RIGHT TO CANCELLATION: YOU MAY CANCEL
 THIS CONTRACT WITHOUT PENALTY OR FURTHER OBLIGATION WITHIN TEN  BUSINESS
 DAYS  AFTER  THE  FUNDING  DATE IF YOU RETURN TO THE CONSUMER LITIGATION
 FUNDING COMPANY THE FULL AMOUNT OF THE DISBURSED FUNDS."
   3. THE CONSUMER LITIGATION FUNDING  COMPANY  SHALL  HAVE  NO  ROLE  IN
 DECIDING  WHETHER,  WHEN  AND  HOW  MUCH THE LEGAL CLAIM IS SETTLED FOR,
 HOWEVER, THE CONSUMER AND CONSUMER'S ATTORNEY MUST NOTIFY THE COMPANY OF
 THE OUTCOME OF THE LEGAL CLAIM BY SETTLEMENT OR  ADJUDICATION  PRIOR  TO
 THE  RESOLUTION DATE. THE COMPANY MAY SEEK UPDATED INFORMATION ABOUT THE
 STATUS OF THE LEGAL CLAIM BUT IN NO EVENT SHALL  THE  COMPANY  INTERFERE
 WITH  THE  INDEPENDENT  PROFESSIONAL  JUDGEMENT  OF  THE ATTORNEY IN THE
 HANDLING OF THE LEGAL CLAIM OR ANY SETTLEMENT THEREOF.
   4. WITHIN THE BODY OF THE CONTRACT, IN ALL CAPITAL LETTERS IN AT LEAST
 TWELVE POINT BOLD TYPE FONT CONTAINED WITHIN A BOX: "THE  FUNDED  AMOUNT
 AND  AGREED  UPON  CHARGES  SHALL BE PAID ONLY FROM THE PROCEEDS OF YOUR
 LEGAL CLAIM, AND SHALL BE PAID ONLY TO THE EXTENT THAT THERE ARE  AVAIL-
 ABLE  PROCEEDS  FROM  YOUR LEGAL CLAIM. YOU WILL NOT OWE (INSERT NAME OF
 THE CONSUMER LITIGATION  FUNDING  COMPANY)  ANYTHING  IF  THERE  ARE  NO
 PROCEEDS  FROM  YOUR  LEGAL CLAIM, UNLESS YOU HAVE VIOLATED ANY MATERIAL
 TERM OF THIS CONTRACT OR YOU HAVE COMMITTED FRAUD AGAINST  (INSERT  NAME
 OF CONSUMER LITIGATION FUNDING COMPANY)."
   5.  LOCATED  IMMEDIATELY  ABOVE  THE  PLACE  ON THE CONTRACT WHERE THE
 CONSUMER'S SIGNATURE IS REQUIRED, IN TWELVE POINT BOLD  TYPE  FONT:  "DO
 NOT  SIGN THIS CONTRACT BEFORE YOU READ IT COMPLETELY.  DO NOT SIGN THIS
 CONTRACT IF IT  CONTAINS  ANY  BLANK  SPACES.  YOU  ARE  ENTITLED  TO  A
 COMPLETELY FILLED-IN COPY OF THE CONTRACT BEFORE YOU SIGN THIS CONTRACT.
 YOU  SHOULD OBTAIN THE ADVICE OF ANY ATTORNEY.  DEPENDING ON THE CIRCUM-
 STANCES, YOU MAY WANT TO CONSULT A TAX, PUBLIC OR PRIVATE BENEFITS PLAN-
 NING, OR FINANCIAL PROFESSIONAL. YOU ACKNOWLEDGE THAT YOUR  ATTORNEY  IN
 THE LEGAL CLAIM HAS PROVIDED NO TAX, PUBLIC OR PRIVATE BENEFIT PLANNING,
 OR FINANCIAL ADVICE REGARDING THIS TRANSACTION.  YOU FURTHER ACKNOWLEDGE
 THAT YOUR ATTORNEY HAS EXPLAINED THE TERMS AND CONDITIONS OF THE CONSUM-
 ER LITIGATION FUNDING CONTRACT."
   6.  A COPY OF THE EXECUTED CONTRACT SHALL PROMPTLY BE DELIVERED TO THE
 ATTORNEY FOR THE CONSUMER.
   § 899-HHH. VIOLATIONS. 1.  ANY  CONSUMER  LITIGATION  FUNDING  COMPANY
 FOUND IN WILLFUL VIOLATION OF ANY PROVISION OF THIS ARTICLE IN A SPECIF-
 IC  FUNDING CASE: (A) WAIVES ITS RIGHT TO RECOVER BOTH THE FUNDED AMOUNT
 AND ANY AND ALL CHARGES, AS DEFINED IN SUBDIVISION TWO OF SECTION  EIGHT
 HUNDRED  NINETY-NINE-CCC  OF  THIS ARTICLE, IN THAT PARTICULAR CASE; AND
 (B) SHALL BE LIABLE FOR A CIVIL PENALTY OF NOT MORE THAN  FIVE  THOUSAND
 DOLLARS  FOR EACH VIOLATION, WHICH SHALL ACCRUE TO THE STATE OF NEW YORK
 AND MAY BE RECOVERED IN A CIVIL ACTION BROUGHT BY THE ATTORNEY GENERAL.
   2. NOTHING IN THIS ARTICLE SHALL BE CONSTRUED TO RESTRICT THE EXERCISE
 OF POWERS OR THE PERFORMANCE OF THE DUTIES OF THE NEW YORK STATE  ATTOR-
 NEY  GENERAL,  WHICH  HE  OR SHE IS AUTHORIZED TO EXERCISE OR PERFORM BY
 LAW.
 A. 7655--A                          6
 
   § 899-III. ASSIGNABILITY; LIENS. 1. THE CONTINGENT RIGHT TO RECEIVE AN
 AMOUNT OF THE POTENTIAL PROCEEDS OF A LEGAL CLAIM  IS  ASSIGNABLE  BY  A
 CONSUMER.
   2.  ONLY  ATTORNEY'S  LIENS  RELATED  TO  THE LEGAL CLAIM WHICH IS THE
 SUBJECT OF THE CONSUMER LITIGATION FUNDING OR MEDICARE OR OTHER STATUTO-
 RY LIENS RELATED TO THE LEGAL CLAIM SHALL TAKE PRIORITY OVER ANY LIEN OF
 THE CONSUMER LITIGATION FUNDING COMPANY.  ALL  OTHER  LIENS  SHALL  TAKE
 PRIORITY BY NORMAL OPERATION OF LAW.
   §  899-JJJ.  EFFECT  OF COMMUNICATION ON PRIVILEGES. ALL COMMUNICATION
 BETWEEN THE CONSUMER'S ATTORNEY IN THE  LEGAL  CLAIM  AND  THE  CONSUMER
 LEGAL FUNDING COMPANY AS IT PERTAINS TO THE CONSUMER LEGAL FUNDING SHALL
 FALL WITHIN THE SCOPE OF THE ATTORNEY CLIENT PRIVILEGE, INCLUDING, WITH-
 OUT LIMITATION, THE WORK-PRODUCT DOCTRINE.
   §  899-KKK.  REGISTRATION.  1.  UNLESS  A  CONSUMER LITIGATION FUNDING
 COMPANY HAS FIRST REGISTERED WITH THE STATE OF NEW YORK PURSUANT TO THIS
 ARTICLE, THE COMPANY MAY NOT ENGAGE IN THE BUSINESS  OF  CONSUMER  LITI-
 GATION FUNDING IN THIS STATE.
   2.  AN APPLICANT'S REGISTRATION MUST BE FILED IN THE MANNER PRESCRIBED
 BY THE SECRETARY OF STATE AND MUST CONTAIN ALL THE INFORMATION  REQUIRED
 BY  THE  DEPARTMENT  OF STATE TO MAKE AN EVALUATION OF THE CHARACTER AND
 FITNESS OF THE APPLICANT COMPANY. THE INITIAL APPLICATION MUST BE ACCOM-
 PANIED BY A FIVE HUNDRED DOLLAR FEE. A RENEWAL REGISTRATION MUST INCLUDE
 A TWO HUNDRED DOLLAR FEE. A REGISTRATION MUST BE RENEWED EVERY TWO YEARS
 AND EXPIRES ON THE THIRTIETH OF SEPTEMBER.
   3. A CERTIFICATE OF REGISTRATION MAY NOT BE ISSUED UNLESS THE  DEPART-
 MENT  OF STATE, UPON INVESTIGATION, FINDS THAT THE CHARACTER AND FITNESS
 OF THE APPLICANT COMPANY, AND OF THE OFFICERS AND DIRECTORS THEREOF, ARE
 SUCH AS TO WARRANT BELIEF THAT THE BUSINESS WILL  BE  OPERATED  HONESTLY
 AND FAIRLY WITHIN THE PURPOSES OF THIS ARTICLE.
   4.  EVERY  REGISTRANT  SHALL ALSO, AT THE TIME OF FILING SUCH APPLICA-
 TION, FILE WITH THE DEPARTMENT OF STATE, IF THE DEPARTMENT OF  STATE  SO
 REQUIRES,  A  BOND  SATISFACTORY TO THE DEPARTMENT OF STATE IN AN AMOUNT
 NOT TO EXCEED FIFTY THOUSAND DOLLARS. IN LIEU OF THE BOND AT THE  OPTION
 OF  THE  REGISTRANT,  THE  REGISTRANT  MAY POST AN IRREVOCABLE LETTER OF
 CREDIT. THE TERMS OF THE BOND MUST RUN CONCURRENT  WITH  THE  PERIOD  OF
 TIME  DURING  WHICH  THE  REGISTRATION  WILL BE IN EFFECT. THE BOND MUST
 PROVIDE THAT THE REGISTRANT WILL FAITHFULLY CONFORM TO AND ABIDE BY  THE
 PROVISIONS  OF THIS ARTICLE AND TO ALL RULES LAWFULLY MADE BY THE ADMIN-
 ISTRATOR UNDER THIS ACT AND TO ANY SUCH PERSON OR PERSONS  ANY  AND  ALL
 AMOUNTS  OF  MONEY  THAT MAY BECOME DUE OR OWING TO THE STATE OR TO SUCH
 PERSON OR PERSONS FROM THE REGISTRANT UNDER AND BY VIRTUE OF THIS  ARTI-
 CLE DURING THE PERIOD FOR WHICH THE BOND IS GIVEN.
   5.  UPON WRITTEN REQUEST, THE APPLICANT SHALL BE ENTITLED TO A HEARING
 ON THE QUESTION OF THE APPLICANT'S QUALIFICATIONS FOR REGISTRATION IF:
   (A) THE DEPARTMENT OF STATE HAS NOTIFIED THE APPLICANT IN WRITING THAT
 THE APPLICATION HAS BEEN DENIED, OR
   (B) THE DEPARTMENT OF STATE HAS NOT ISSUED A REGISTRATION WITHIN SIXTY
 DAYS AFTER THE APPLICATION FOR THE REGISTRATION WAS FILED.
   6. A REQUEST FOR A HEARING MAY NOT BE  MADE  MORE  THAN  FIFTEEN  DAYS
 AFTER  THE  DEPARTMENT HAS MAILED A WRITTEN NOTICE TO THE APPLICANT THAT
 THE APPLICATION HAS BEEN DENIED AND STATING IN SUBSTANCE THE  DEPARTMENT
 OF STATE'S FINDINGS SUPPORTING DENIAL OF THE APPLICATION.
   7.  NOTWITHSTANDING  THE PRIOR APPROVAL REQUIREMENT OF SUBDIVISION ONE
 OF THIS SECTION, A CONSUMER LITIGATION FUNDING COMPANY  THAT  REGISTERED
 WITH  THE DEPARTMENT OF STATE BETWEEN THE EFFECTIVE DATE OF THIS ARTICLE
 OR WHEN THE DEPARTMENT OF STATE HAS MADE APPLICATIONS AVAILABLE  TO  THE
 A. 7655--A                          7
 
 PUBLIC,  WHICHEVER  IS LATER, AND ONE HUNDRED EIGHTY DAYS THEREAFTER MAY
 ENGAGE IN CONSUMER LITIGATION FUNDING WHILE THE  COMPANY'S  REGISTRATION
 IS PENDING APPROVAL WITH THE DEPARTMENT OF STATE. ALL FUNDING AGREEMENTS
 ENTERED INTO PRIOR TO THE EFFECTIVE DATE OF THIS ARTICLE ARE NOT SUBJECT
 TO THE TERMS OF THIS ARTICLE.
   8. NO CONSUMER LITIGATION FUNDING COMPANY MAY USE ANY FORM OF CONSUMER
 LITIGATION  FUNDING CONTRACT IN THIS STATE UNLESS IT HAS BEEN FILED WITH
 THE DEPARTMENT OF STATE IN ACCORDANCE WITH  THE  FILING  PROCEDURES  SET
 FORTH BY THE SECRETARY OF STATE.
   9.  THE  SECRETARY  OF  STATE  IS HEREBY AUTHORIZED TO ADOPT RULES AND
 REGULATIONS TO IMPLEMENT THE PROVISIONS OF THIS SECTION AS NEEDED.
   § 899-LLL. REPORTING. 1. EACH CONSUMER LITIGATION FUNDING COMPANY THAT
 ENGAGES IN BUSINESS IN THE STATE SHALL SUBMIT A REPORT TO THE DEPARTMENT
 OF STATE NO LATER THAN THE THIRTY-FIRST OF JANUARY OF EACH YEAR SPECIFY-
 ING:
   (A) NUMBER OF CONSUMER LITIGATION FUNDINGS BY THE COMPANY;
   (B) SUMMATION OF FUNDED AMOUNTS IN DOLLAR FIGURE; AND
   (C) ANNUAL PERCENTAGE CHARGED TO EACH  CONSUMER  WHERE  REPAYMENT  WAS
 MADE.
   2.  THE  DEPARTMENT  OF STATE SHALL MAKE SUCH INFORMATION AVAILABLE TO
 THE PUBLIC, IN A MANNER WHICH MAINTAINS THE CONFIDENTIALITY OF THE  NAME
 OF  EACH  COMPANY  AND  CONSUMER,  NO  LATER  THAN NINETY DAYS AFTER THE
 REPORTS ARE SUBMITTED.
   § 899-MMM. SEVERABILITY. IF ANY PROVISION OF THIS ARTICLE IS, FOR  ANY
 REASON,  DECLARED  UNCONSTITUTIONAL  OR INVALID, IN WHOLE OR IN PART, BY
 ANY COURT OF COMPETENT JURISDICTION, SUCH PORTION SHALL BE DEEMED SEVER-
 ABLE, AND SUCH UNCONSTITUTIONALITY OR INVALIDITY SHALL  NOT  AFFECT  THE
 VALIDITY  OF  THE  REMAINING  PORTIONS  OF THIS ARTICLE, WHICH REMAINING
 PORTIONS SHALL CONTINUE IN FULL FORCE AND EFFECT.
   § 4. This act shall take effect on the one hundred eightieth day after
 it shall have become a law; provided, however, it shall not apply or  in
 any  way affect or invalidate any consumer litigation funding previously
 effectuated prior to the effective date of this act.