The Consumer Legal Funding Act aims to regulate the largely unregulated consumer legal funding industry in New Jersey by establishing clear definitions and requirements for consumer legal funding contracts. Key provisions include mandates for contracts to be fully completed, the inclusion of a right of rescission allowing consumers to cancel within five business days, and the necessity for the consumer's initials on each page. Additionally, attorneys representing consumers must provide a written acknowledgment confirming the disclosure of costs, charges, and the absence of referral fees from funding companies. The bill also emphasizes that consumer legal funding transactions are not classified as loans and outlines the priority of liens related to legal claims.

To enhance consumer protection, the bill prohibits certain practices by funding companies, such as paying referral fees, advertising misleading information, and charging excessive fees. It establishes a registration process with the Department of Banking and Insurance, requiring funding companies to adhere to specific operational standards. Furthermore, the bill ensures that contracts are void if the attorney's acknowledgment is incomplete and prohibits attorneys from having a financial interest in the funding company. In cases of intentional violations, funding companies can only recover the funded amount without additional charges, and consumers are allowed to assign their contingent rights to potential proceeds from legal claims.