The Litigation Financing Transparency and Consumer Protection Act establishes a regulatory framework for litigation financing contracts in Iowa, requiring all litigation financers to register with the Secretary of State. The bill defines key terms such as "consumer," "litigation financer," and "litigation financing," and mandates that registration includes essential information like the legal name, addresses, and ownership details of the financer. All filed documents will be public records, and any changes to registration must be reported within thirty days. The bill also imposes strict limitations on litigation financers, prohibiting practices such as charging excessive interest rates, paying referral fees, and influencing civil actions.

In addition to registration requirements, the bill enhances consumer protections by mandating full disclosure of contract terms and prohibiting amendments without consent from all parties. It requires plaintiffs or their attorneys to inform relevant parties about any litigation financing contracts, particularly those involving foreign financing. The legislation also introduces exemptions for certain entities, such as nonprofit organizations and regulated lenders, under specific conditions. It establishes fiduciary duties for litigation financers in class action lawsuits and holds them jointly liable for costs or sanctions against consumers. Any violations of the new regulations will render financing contracts unenforceable, and the Secretary of State will have the authority to adopt oversight rules. The law is set to take effect on January 1, 2026, applying to civil actions or administrative proceedings initiated on or after that date.