The proposed bill in South Dakota establishes comprehensive regulations for litigation financing, defining essential terms such as "consumer," "litigation financer," and "litigation financing contract." It requires that all individuals or entities involved in litigation financing obtain a money lender license and adhere to specific operational standards, including maintaining good standing and providing ownership details. The bill also mandates that all documents submitted to the Division of Banking be public records and prohibits practices like paying referral fees or influencing civil action handling. Additionally, it outlines necessary disclosures in litigation financing contracts, including cancellation rights and maximum recoverable amounts, while ensuring that legal representatives disclose any financial ties to litigation financers.

Moreover, the legislation imposes new obligations on litigation financers regarding their relationships with legal representatives of class members, requiring full disclosure of any connections to all parties involved. Class members are granted the right to request copies of litigation financing contracts from class counsel. The bill further establishes that litigation financers will be jointly liable for costs or sanctions imposed on consumers and that any violations will render financing contracts unenforceable. These provisions will apply to civil actions or administrative proceedings initiated after July 1, 2025.