SB 342 - This act creates the "Consumer Legal Funding Act" with several definitions including "Consumer Legal Funding Contract" in which a consumer legal funding company purchases and a consumer assigns to the company a contingent right to receive potential proceeds from a settlement, judgment, award, or verdict obtained in the consumer’s legal claim. The act provides for requirements to be included in the contract. The company must provide the consumer’s attorney with a written notice of the contract within three business days of the funding date. The contract is only to be entered into if a valid legal claim exists and it is not valid if its terms exceed a period of forty-eight months.
Additionally, the act details actions that cannot be taken by the company, such as paying or offering to pay or accepting commissions, referral fees, or other forms of consideration from an attorney, certain healthcare providers, or intentionally advertising false or misleading information; or receiving any right to make decisions relating to the conduct of the underlying legal claim or resolution thereof.
Under this act, all consumer legal funding contracts must contain disclosures regarding material terms of the contract. The act provides for specific language to be included in the body of the contract, such as the total amount assigned by the consumer; itemization of one-time charges; payment schedule; and other specifics.
The act provides that only attorney’s liens related to the legal claim, Medicare, or other statutory liens related to the legal claim take priority over claims to proceeds from the consumer legal funding company.
Under this act, a consumer legal funding company shall not engage in the business of consumer legal funding in the state of Missouri, unless it first obtained a license from the Division of Finance. The initial or renewal license applications must be in writing, made under oath, and on the form provided by the Director of the Department of Finance. The act provides for fees associated with licensing.
Under this act, if the Director of the Division of Finance determines that any consumer legal funding company fails to meet its obligations under this act, or any provisions relating to consumer legal funding, the Director may issue an order to cease and desist which is enforceable by a civil penalty of no more than one thousand dollar per day for each day a violation occurs.
Furthermore, if any consumer legal funding company fails to comply with the provision of this act, or any laws relating to consumer legal funding, its license may be suspended or revoked by the Director of the Division of Finance. The Division of Finance may also investigate and examine each consumer funding company as necessary to carry out this act.
Additionally, this act creates the "Consumer Litigation Financing Act". "Litigation financing transaction" is defined as financing provided to a consumer in return for the consumer assigning a contingent right to receive moneys from the settlement, judgment, award, or verdict from a consumer’s legal claim. Under this act, all civil litigation funding must meet certain requirements. This act applies to any class actions but does not apply to litigation financing provided to commercial enterprises.
Under this act, every litigation financier shall not engage in the business of consumer legal funding unless it has first obtained a license from the Division of Finance and met certain requirements, including the posting of a surety bond not to exceed fifty thousand dollars. Additionally, the Director of the Division of Finance may deny, suspend, revoke, and place other restrictions on the issuance of the license if a litigation financier is in violation of this act.
This act details actions that cannot be taken by the litigation financier similarly to the actions that cannot be taken by the consumer legal company. The written contract must be completely filled in. Also, the act provides for the disclosures to be included in the contract which are regarded as material terms of the contract. The existence of litigation financing arrangements are subject to discovery in personal injury litigation.
Under this act, in the event a litigation financier fails to perform its obligations under this act, the Director of the Division of Finance may take disciplinary actions similar to the disciplinary actions when a consumer legal funding company is in violation of this act.
Under this act, the terms of the litigation financing agreement must contain disclosures, constituted as material terms of the litigation financing contract. The act details requirements of the construction of the litigation financing agreement.
Under this act, the practice of litigation financing is regulated by the Division of Finance and any violation of the provision in this act make the contract unenforceable by the parties or any successor-in-interest.
This act is identical to provisions in SCS/HCS/HB 725 (2023), SB 708 (2023), substantially similar to provisions in HCS/HB 628 (2023), HCS/SCS/SB 103 (2023), HCS/SS/SB 181 (2023), and similar to HCS/HB 2771 (2022).