The proposed bill, HB2638, introduces regulations for litigation financing in Arizona by adding a new chapter to Title 12 of the Arizona Revised Statutes. It establishes clear definitions related to litigation financing, such as "litigation financier" and "litigation financing agreement," and outlines the rights and responsibilities of litigation financiers. Key provisions include prohibiting financiers from controlling the litigation process or receiving a larger share of proceeds than the parties involved, as well as imposing strict disclosure requirements regarding financing agreements and relationships with foreign entities. The bill also mandates that litigation financiers indemnify consumers against adverse costs, except in cases of intentional wrongdoing, and declares any agreements that violate these regulations as void.

The bill marks a significant update to current law by explicitly including new definitions and establishing a clear timeline for implementation, effective December 31, 2024. It also empowers courts to impose sanctions for non-compliance and classifies violations as unlawful practices under the Arizona Consumer Fraud Act. Overall, HB2638 aims to enhance transparency and protect consumers in litigation financing arrangements, ensuring that the control of litigation remains with the parties involved and their counsel.