F L O R I D A H O U S E O F R E P R E S E N T A T I V E S
HB 1447 2023
1 A bill to be entitled
2 An act relating to litigation financing consumer
3 protection; creating part VIII of ch. 501, F.S.,
4 entitled "Litigation Financing Consumer Protection
5 Act"; creating s. 501.1001, F.S.; providing
6 definitions; creating s. 501.1002, F.S.; requiring
7 litigation financiers to register with the Department
8 of State before engaging in litigation financing;
9 providing registration requirements; requiring
10 litigation financiers to file a surety bond meeting
11 specified requirements; requiring the department serve
12 notice to such financiers and to revoke such
13 registrations for certain noncompliance; authorizing
14 the department to adopt rules; creating s. 501.1003,
15 F.S.; providing requirements for litigation financing
16 contracts; creating s. 501.1004, F.S.; prohibiting
17 litigation financiers from engaging in specified
18 conduct; creating s. 501.1005, F.S.; providing
19 disclosure requirements for litigation financing
20 contracts; creating s. 501.1006, F.S.; authorizing
21 litigation financiers to assess specified interest,
22 fees, and charges; providing requirements for such
23 interest, fees, and charges; prohibiting a litigation
24 financier from assessing specified fees or charges;
25 creating s. 501.1007, F.S.; providing that specified
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26 communications between attorneys and litigation
27 financiers do not effect statutory or common-law
28 privilege; creating s. 501.1008, F.S.; providing that
29 violations of the act are deceptive and unfair trade
30 practices; providing construction; providing an
31 effective date.
32
33 Be It Enacted by the Legislature of the State of Florida:
34
35 Section 1. Part VIII of chapter 501, Florida Statutes,
36 consisting of sections 501.1001, 501.1002, 501.1003, 501.1004,
37 501.1005, 501.1006, 501.1007, and 501.1008, Florida Statutes, is
38 created and entitled "Litigation Financing Consumer Protection
39 Act."
40 Section 2. Section 501.1001, Florida Statutes, is created
41 to read:
42 501.1001 Definitions.—As used in this part, the term:
43 (1) "Consumer" means any individual.
44 (2) "Department" means the Department of State.
45 (3) "Funded amount" means the funds actually received and
46 retained by a consumer under a litigation financing contract.
47 (4) "Health care practitioner" has the same meaning as in
48 s. 456.001.
49 (5) "Interest" means the cost of obtaining litigation
50 financing and includes any profit or advantage of any kind
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51 whatsoever that a litigation financier may charge, contract for,
52 collect, receive, or in any way obtain as a condition for a
53 litigation financing contract. Charges and fees specifically
54 authorized by this part are not interest.
55 (6) "Litigation financier" means a person engaged in the
56 business of litigation financing.
57 (7) "Litigation financing" means a nonrecourse transaction
58 in which a litigation financier provides funds to a consumer in
59 exchange for an assignment of the consumer's contingent right to
60 receive an amount of the potential net proceeds of the
61 consumer's civil action or claim. The term does not include:
62 (a) Legal services provided to a consumer on a contingency
63 fee basis, or advanced legal costs, where such services or costs
64 are provided by an attorney representing the consumer in
65 accordance with the Florida Rules of Professional Conduct;
66 (b) A commercial tort claim as defined in s.
67 679.1021(1)(m);
68 (c) A worker's compensation claim under chapter 440;
69 (d) Lending or financing arrangements between an attorney
70 or law firm and a lending institution to fund litigation costs
71 in the ordinary course of business; or
72 (e) A consumer finance loan, as defined in s. 516.01(2).
73 (8) "Net proceeds" means the portion of the proceeds of a
74 civil action or claim remaining after satisfaction of all liens
75 with a higher priority than that of the litigation financier as
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76 specified in s. 501.1006(2).
77 Section 3. Section 501.1002, Florida Statutes, is created
78 to read:
79 501.1002 Litigation financier registration; registration
80 revocation.—
81 (1) A litigation financier may not engage in litigation
82 financing in the state before registering as a litigation
83 financier under this section.
84 (a) A litigation financier that is a corporation, limited
85 liability company, or partnership is registered under this
86 section if it has:
87 1. Met the bond requirements of subsection (2);
88 2. A status of active and in good standing as reflected in
89 department records; and
90 3. Filed articles of organization or incorporation, a
91 certificate of limited partnership, or another organizational
92 document, or, if a foreign entity, an application for a
93 certificate of authority with the department stating therein
94 that it is a litigation financier.
95 (b) A litigation financier who is not a corporation,
96 limited liability company, or partnership is registered under
97 this section if he or she has:
98 1. Met the bond requirements of subsection (2); and
99 2. Filed a litigation financier registration application
100 with the department on a form prescribed by the department
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101 containing, at a minimum:
102 a. The applicant's full legal name and fictitious name, if
103 any;
104 b. The applicant's physical address, mailing address, and
105 telephone number;
106 c. A statement that the applicant is a litigation
107 financier; and
108 d. Any other information the department deems necessary.
109 (2) A litigation financier must file with the department a
110 $250,000 surety bond, which bond must be:
111 (a) Issued by a surety company authorized to do business
112 in the state.
113 (b) Payable to the department for the payment of damages
114 awarded to a consumer under part II of this chapter.
115 (c) Effective so long as the department's records
116 designate the litigation financier as such or a litigation
117 financing contract with the litigation financier is effective.
118 (3) A litigation financier must amend its registration
119 within 30 days after the date the information contained therein
120 changes or becomes inaccurate in any respect. A litigation
121 financier who is not a corporation, limited liability company,
122 or partnership may amend his or her registration by filing with
123 the department an amendment on a form prescribed by the
124 department.
125 (4) If the department determines that a litigation
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126 financier has not complied with the requirements of this
127 section, the department shall serve the litigation financier
128 notice in a record of its intent to revoke the registration of
129 the litigation financier. Such notice:
130 (a) Must specifically state all grounds for revocation;
131 and
132 (b) May be sent by electronic mail to a litigation
133 financier that provided the department with an electronic mail
134 address.
135 (5) A litigation financier has 60 days after the date the
136 department sends the notice under subsection (4) to correct the
137 grounds for revocation or demonstrate to the reasonable
138 satisfaction of the department that each ground determined by
139 the department does not exist. The department shall revoke the
140 litigation financier registration of any litigation financier
141 who fails to comply with the requirements of this section.
142 (6) The department has the authority reasonably necessary
143 to enable it to administer this section efficiently, to perform
144 duties imposed upon it, and to adopt rules to implement this
145 section.
146 Section 4. Section 501.1003, Florida Statutes, is created
147 to read:
148 501.1003 Litigation financing contracts; terms.—The
149 litigation financing terms must be set forth in a written
150 contract containing:
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151 (1) A right of rescission allowing the consumer to cancel
152 the contract without penalty, interest, fees, charges, or
153 further obligation if, within 5 business days after execution of
154 a contract or receipt of funds by the consumer, whichever is
155 later, the consumer provides written rescission notice and
156 returns any funds already provided under the contract to the
157 litigation financier;
158 (2) The consumer's written acknowledgement of whether an
159 attorney represents him or her in the civil action or claim that
160 is the subject of the contract; and
161 (3) A statement indicating that, in the event the proc eeds
162 of the subject civil action or claim are paid into a settlement
163 fund or trust, the litigation financier must notify the fund or
164 trust administrator of any outstanding financial obligations
165 arising from the contract.
166 Section 5. Section 501.1004, Florida Statutes, is created
167 to read:
168 501.1004 Prohibited conduct.—A litigation financier may
169 not:
170 (1) Pay or offer to pay a commission, referral fee, or
171 other consideration to any person, including an attorney, law
172 firm, or health care practitioner, for referring a consumer to a
173 litigation financier;
174 (2) Accept a commission, referral fee, rebate, or other
175 consideration from any person, including an attorney, law firm,
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176 or health care practitioner;
177 (3) Advertise false or misleading information about it s
178 products or services;
179 (4) Refer a consumer to a specific attorney, law firm, or
180 health care practitioner, except that, if a consumer lacks legal
181 representation, the litigation financier may refer the consumer
182 to an attorney referral service operated by a county or state
183 bar association;
184 (5) Fail to promptly supply a copy of any complete
185 litigation financing contract to the consumer;
186 (6) Attempt to obtain a waiver of any remedy, including,
187 but not limited to, compensatory, statutory, or punitive
188 damages, that the consumer might otherwise have in the subject
189 civil action or claim;
190 (7) Attempt to effect arbitration or waiver of a
191 consumer's right to a jury trial in the subject civil action or
192 claim;
193 (8) Offer or provide legal advice to the consumer
194 regarding the litigation financing contract or the subject civil
195 action or claim;
196 (9) Assign a litigation financing contract in whole or in
197 part; or
198 (10) Direct, or make any decisions with respect to, the
199 course of the subject civil action or claim or any settlement
200 thereof.
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201 Section 6. Section 501.1005, Florida Statutes, is created
202 to read:
203 501.1005 Required disclosures.—
204 (1) A litigation financing contract must contain the
205 following disclosures on the front page of the contract in at
206 least 12-point boldfaced type:
207 (a) Notice of the consumer's right to a completely filled
208 in contract;
209 (b) A statement that the litigation financier does not
210 have the right to, and may not make any decisions or attempt to,
211 influence the consumer or his or her attorney about the conduct
212 of the civil action or claim that is the subject of the contract
213 and that the right to make such decisions remains solely with
214 the consumer;
215 (c) The total funded amount provided to the consumer;
216 (d) An itemized list of all fees and charges payable by
217 the consumer;
218 (e) The interest rate;
219 (f) The total amount due from the consumer in 6-month
220 intervals for 3 years, including all interest, fees, and
221 charges;
222 (g) A statement that the consumer will owe no fees or
223 charges other than those described in the disclosures; and
224 (h) The cumulative amount due from the consumer