The Consumer Legal Funding Act aims to enhance regulation and oversight of consumer legal funding providers in New Jersey, which currently operate with minimal regulation. The bill defines essential terms related to consumer legal funding and establishes requirements for contracts, including the necessity for contracts to be fully completed, the inclusion of a right of rescission allowing consumers to cancel within five business days, and the requirement for consumer initials on each page. Additionally, it mandates that the attorney representing the consumer provide a written acknowledgment of the costs, charges, and payment structure associated with the funding.

The legislation also prohibits certain practices by consumer legal 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, ensuring that contracts are void if the attorney's acknowledgment is incomplete. The bill emphasizes ethical boundaries by preventing attorneys from having financial interests in funding companies and protects attorney-client privileges. Furthermore, it allows consumers to assign their rights to potential proceeds from legal claims while limiting the recovery of funding companies to the amount funded if they violate the bill's provisions. Overall, the act seeks to promote transparency and fairness in the consumer legal funding process.