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 introduces definitions for key terms such as "consumer," "charges," and "funded amount," and establishes comprehensive requirements for consumer legal funding contracts. These contracts must be fully completed upon presentation, include a right of rescission allowing consumers to cancel within five business days, and require the consumer's initials on each page. Additionally, contracts must be provided in the consumer's native language if applicable. The legislation also mandates that contracts include a written acknowledgment from the consumer's attorney, confirming that all proceeds will be disbursed through a trust account and that the attorney will not receive referral fees from the funding company.

Moreover, the bill prohibits consumer legal funding companies from engaging in practices such as paying referral fees, providing misleading advertisements, and charging excessive fees. It requires these companies to register with the Department of Banking and Insurance, detailing the registration process, fees, and requirements for maintaining good standing. The act clarifies that consumer legal funding transactions are not classified as loans and specifies that only certain liens take priority over the funding company's claims. By instituting these regulations, the bill seeks to protect consumers by ensuring transparency, fairness, and the integrity of the attorney-client relationship in the consumer legal funding process.