The proposed bill would update current statutes on litigation financing by introducing new consumer protection measures and regulatory requirements. It would establish that courts must consider the existence of litigation financing when assessing the adequacy of class representatives or counsel in class action and multidistrict litigation, provided there has been prior disclosure of such financing. The bill also prohibits litigation financiers from making decisions related to the litigation process, ensuring that the named party and their counsel retain full control. Additionally, it mandates disclosures regarding commissions or referral fees paid to legal counsel or healthcare providers, which must be acknowledged by the borrower before entering into a financing agreement.

Moreover, the bill would make litigation financing agreements voidable if they violate the new requirements and classify such violations as unlawful practices under the Arizona Consumer Fraud Act. It limits the ability to challenge these agreements to the Attorney General or the involved parties and clarifies that violations must be knowing to be enforceable. The act aims to enhance transparency and protect consumers in litigation financing arrangements, with an effective date of January 1, 2026. Overall, these changes would significantly reshape the regulatory landscape for litigation financing in Arizona.