S T A T E O F N E W Y O R K
________________________________________________________________________
1270--A
2021-2022 Regular Sessions
I N A S S E M B L Y
January 8, 2021
___________
Introduced by M. of A. MAGNARELLI, SIMON, SAYEGH, BUTTENSCHON, COOK,
WILLIAMS, GUNTHER, NOLAN, DINOWITZ, DICKENS, STIRPE, WALLACE, HEVESI,
JACKSON, GONZALEZ-ROJAS, BURGOS, GALEF -- Multi-Sponsored by -- M. of
A. GRIFFIN -- read once and referred to the Committee on Consumer
Affairs and Protection -- recommitted to the Committee on Consumer
Affairs and Protection in accordance with Assembly Rule 3, sec. 2 --
committee discharged, bill amended, ordered reprinted as amended and
recommitted to said committee
AN ACT to amend the general business law, in relation to consumer liti-
gation funding
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. Short title. This act shall be known and may be cited as
the "consumer litigation funding act".
§ 2. Legislative intent. In an effort to promote consumer protections
related to consumer litigation funding transactions, this act estab-
lishes that such transactions should be subject to state regulation and
sets forth requirements regarding disclosure, licensing, funding company
and attorney responsibilities and limitations, violations and other
items.
§ 3. The general business law is amended by adding a new article 39-H
to read as follows:
ARTICLE 39-H
THIRD PARTY LITIGATION FINANCING
SECTION 899-CCC. DEFINITIONS.
899-DDD. CONTRACT REQUIREMENTS; RIGHT OF RESCISSION.
899-EEE. PROHIBITIONS AND CHARGE LIMITATIONS.
899-FFF. CONTRACTED AMOUNTS.
899-GGG. DISCLOSURES.
899-HHH. VIOLATIONS.
899-III. ASSIGNABILITY; LIENS.
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD00982-02-2
A. 1270--A 2
899-JJJ. EFFECT OF COMMUNICATION ON PRIVILEGES.
899-KKK. REGISTRATION.
899-LLL. REPORTING.
899-MMM. SEVERABILITY.
§ 899-CCC. DEFINITIONS. AS USED IN THIS ARTICLE, THE FOLLOWING TERMS
SHALL HAVE THE FOLLOWING MEANINGS:
1. "ADVERTISE" MEANS PUBLISHING OR DISSEMINATING ANY WRITTEN, ORAL,
ELECTRONIC OR PRINTED COMMUNICATION OR ANY COMMUNICATION BY MEANS OF
RECORDED TELEPHONE MESSAGES OR TRANSMITTED OR BROADCAST ON RADIO, TELE-
VISION, THE INTERNET OR SIMILAR COMMUNICATIONS MEDIA, INCLUDING AUDIO
RECORDINGS, FILM STRIPS, MOTION PICTURES AND VIDEOS, PUBLISHED, DISSEM-
INATED, CIRCULATED OR PLACED BEFORE THE PUBLIC, DIRECTLY OR INDIRECTLY,
FOR THE PURPOSE OF INDUCING A CONSUMER TO ENTER INTO A CONSUMER LITI-
GATION FUNDING.
2. "CHARGES" MEANS THE AMOUNT OF MONEY TO BE PAID TO THE CONSUMER
LITIGATION FUNDING COMPANY BY OR ON BEHALF OF THE CONSUMER, ABOVE THE
FUNDED AMOUNT PROVIDED BY OR ON BEHALF OF THE COMPANY TO A NEW YORK
CONSUMER PURSUANT TO THIS ARTICLE. CHARGES INCLUDE ALL ADMINISTRATIVE,
ORIGINATION, UNDERWRITING OR OTHER FEES, INCLUDING INTEREST, NO MATTER
HOW DENOMINATED.
3. "CONSUMER LITIGATION FUNDING" MEANS A NON-RECOURSE TRANSACTION IN
WHICH A CONSUMER LITIGATION FUNDING COMPANY PURCHASES AND A CONSUMER
ASSIGNS TO THE COMPANY A CONTINGENT RIGHT TO RECEIVE AN AMOUNT OF THE
POTENTIAL PROCEEDS OF A SETTLEMENT, JUDGMENT, AWARD, OR VERDICT OBTAINED
IN THE CONSUMER'S LEGAL CLAIM.
4. "CONSUMER LITIGATION FUNDING COMPANY" OR "COMPANY" MEANS A PERSON
OR ENTITY THAT ENTERS INTO A CONSUMER LITIGATION FUNDING CONTRACT OF NO
MORE THAN FIVE HUNDRED THOUSAND DOLLARS WITH A CONSUMER. THIS TERM SHALL
NOT INCLUDE:
(A) AN IMMEDIATE FAMILY MEMBER OF THE CONSUMER;
(B) A BANK, LENDER, FINANCING ENTITY, OR OTHER SPECIAL PURPOSE ENTITY:
(I) THAT PROVIDES FINANCING TO A CONSUMER LITIGATION FUNDING COMPANY;
OR
(II) TO WHICH A CONSUMER LITIGATION FUNDING COMPANY GRANTS A SECURITY
INTEREST OR TRANSFERS ANY RIGHTS OR INTEREST IN A CONSUMER LITIGATION
FUNDING; OR
(C) AN ATTORNEY OR ACCOUNTANT WHO PROVIDES SERVICES TO A CONSUMER.
5. "CONSUMER" MEANS A NATURAL PERSON WHO HAS A PENDING LEGAL CLAIM AND
WHO RESIDES OR IS DOMICILED IN NEW YORK.
6. "FUNDED AMOUNT" MEANS THE AMOUNT OF MONIES PROVIDED TO, OR ON
BEHALF OF, THE CONSUMER IN THE CONSUMER LITIGATION FUNDING. "FUNDED
AMOUNT" EXCLUDES CHARGES.
7. "FUNDING DATE" MEANS THE DATE ON WHICH THE FUNDED AMOUNT IS TRANS-
FERRED TO THE CONSUMER BY THE CONSUMER LITIGATION FUNDING COMPANY EITHER
BY PERSONAL DELIVERY OR VIA WIRE, ACH OR OTHER ELECTRONIC MEANS OR
MAILED BY INSURED, CERTIFIED OR REGISTERED UNITED STATES MAIL.
8. "IMMEDIATE FAMILY MEMBER" MEANS A PARENT; SIBLING; CHILD BY BLOOD,
ADOPTION, OR MARRIAGE; SPOUSE; GRANDPARENT; OR GRANDCHILD.
9. "LEGAL CLAIM" MEANS A BONA FIDE CIVIL CLAIM OR CAUSE OF ACTION.
10. "RESOLUTION DATE" MEANS THE DATE THE FUNDED AMOUNT, PLUS THE
AGREED UPON CHARGES, ARE DELIVERED TO THE CONSUMER LITIGATION FUNDING
COMPANY BY THE CONSUMER, THE CONSUMER'S ATTORNEY OR OTHERWISE.
§ 899-DDD. CONTRACT REQUIREMENTS; RIGHT OF RESCISSION. 1. ALL CONSUMER
LITIGATION FUNDING CONTRACTS SHALL MEET THE FOLLOWING REQUIREMENTS:
(A) A CONTRACT SHALL BE WRITTEN IN A CLEAR AND COHERENT MANNER USING
WORDS WITH COMMON, EVERYDAY MEANINGS TO ENABLE THE AVERAGE CONSUMER WHO
A. 1270--A 3
MAKES A REASONABLE EFFORT UNDER ORDINARY CIRCUMSTANCES TO READ AND
UNDERSTAND THE TERMS OF THE CONTRACT WITHOUT HAVING TO OBTAIN THE
ASSISTANCE OF A PROFESSIONAL;
(B) THE CONTRACT SHALL BE COMPLETELY FILLED IN WHEN PRESENTED TO THE
CONSUMER FOR SIGNATURE;
(C) THE CONTRACT SHALL CONTAIN, IN TWELVE POINT BOLD TYPE FONT, A
RIGHT OF RESCISSION, ALLOWING THE CONSUMER TO CANCEL THE CONTRACT WITH-
OUT PENALTY OR FURTHER OBLIGATION IF, WITHIN TEN BUSINESS DAYS AFTER THE
FUNDING DATE, THE CONSUMER RETURNS TO THE CONSUMER LITIGATION FUNDING
COMPANY THE FULL AMOUNT OF THE DISBURSED FUNDS;
(D) THE CONTRACT SHALL CONTAIN THE INITIALS OF THE CONSUMER ON EACH
PAGE;
(E) A STATEMENT THAT THERE ARE NO FEES OR CHARGES TO BE PAID BY THE
CONSUMER OTHER THAN WHAT IS DISCLOSED ON THE DISCLOSURE FORM;
(F) IN THE EVENT THE CONSUMER SEEKS MORE THAN ONE LITIGATION FUNDING
CONTRACT FROM THE SAME COMPANY, A DISCLOSURE PROVIDING THE CUMULATIVE
AMOUNT DUE FROM THE CONSUMER FOR ALL TRANSACTIONS, INCLUDING CHARGES
UNDER ALL CONTRACTS, IF REPAYMENT IS MADE ANY TIME AFTER THE CONTRACTS
ARE EXECUTED;
(G) A STATEMENT OF THE MAXIMUM AMOUNT THE CONSUMER MAY BE OBLIGATED TO
PAY UNDER THE CONTRACT OTHER THAN IN A CASE OF MATERIAL BREACH, FRAUD OR
MISREPRESENTATION BY OR ON BEHALF OF THE CONSUMER; AND
(H) CLEAR AND CONSPICUOUS DETAIL OF HOW CHARGES, INCLUDING ANY APPLI-
CABLE FEES, ARE INCURRED OR ACCRUED.
2. THE CONTRACT SHALL CONTAIN A WRITTEN ACKNOWLEDGEMENT BY THE ATTOR-
NEY RETAINED BY THE CONSUMER IN THE LEGAL CLAIM THAT ATTESTS TO THE
FOLLOWING:
(A) THE ATTORNEY HAS REVIEWED THE MANDATORY DISCLOSURES IN SECTION
EIGHT HUNDRED NINETY-NINE-GGG OF THIS ARTICLE WITH THE CONSUMER;
(B) THE ATTORNEY IS BEING PAID ON A CONTINGENCY BASIS PURSUANT TO A
WRITTEN FEE AGREEMENT;
(C) ALL PROCEEDS OF THE LEGAL CLAIM WILL BE DISBURSED VIA EITHER THE
TRUST ACCOUNT OF THE ATTORNEY OR A SETTLEMENT FUND ESTABLISHED TO
RECEIVE THE PROCEEDS OF THE LEGAL CLAIM ON BEHALF OF THE CONSUMER;
(D) THE ATTORNEY IS OBLIGATED TO DISBURSE FUNDS FROM THE LEGAL CLAIM
AND TAKE ANY OTHER STEPS TO ENSURE THAT THE TERMS OF THE LITIGATION
FUNDING CONTRACT ARE FULFILLED;
(E) THE ATTORNEY HAS NOT RECEIVED A REFERRAL FEE OR OTHER CONSIDER-
ATION FROM THE CONSUMER LITIGATION FUNDING COMPANY IN CONNECTION WITH
THE CONSUMER LITIGATION FUNDING, NOR WILL THE ATTORNEY RECEIVE SUCH FEE
OR OTHER CONSIDERATION IN THE FUTURE; AND
(F) THE ATTORNEY IN THE LEGAL CLAIM HAS PROVIDED NO TAX, PUBLIC OR
PRIVATE BENEFIT PLANNING, OR FINANCIAL ADVICE REGARDING THIS TRANS-
ACTION.
3. IN THE EVENT THAT THE ACKNOWLEDGEMENT REQUIRED PURSUANT TO PARA-
GRAPH (C) OF SUBDIVISION TWO OF THIS SECTION IS NOT COMPLETED BY THE
ATTORNEY OR FIRM RETAINED BY THE CONSUMER IN THE LEGAL CLAIM, THE
CONTRACT SHALL BE NULL AND VOID. THE CONTRACT SHALL REMAIN VALID AND
ENFORCEABLE IN THE EVENT THE CONSUMER TERMINATES THE INITIAL ATTORNEY
AND/OR RETAINS A NEW ATTORNEY WITH RESPECT TO THE LEGAL CLAIM.
4. NOTWITHSTANDING PARAGRAPH B OF SUBDIVISION THREE OF SECTION 5-501
OF THE GENERAL OBLIGATIONS LAW, NO PREPAYMENT PENALTIES OR FEES SHALL BE
CHARGED OR COLLECTED ON CONSUMER LITIGATION FUNDING. A PREPAYMENT
PENALTY ON CONSUMER LITIGATION FUNDING SHALL BE UNENFORCEABLE.
§ 899-EEE. PROHIBITIONS AND CHARGE LIMITATIONS. 1. CONSUMER LITI-
GATION FUNDING COMPANIES SHALL BE PROHIBITED FROM:
A. 1270--A 4
(A) PAYING OR OFFERING TO PAY COMMISSIONS, REFERRAL FEES, OR OTHER
FORMS OF CONSIDERATION TO ANY ATTORNEY, LAW FIRM, MEDICAL PROVIDER,
CHIROPRACTOR OR PHYSICAL THERAPIST OR ANY OF THEIR EMPLOYEES FOR REFER-
RING A CONSUMER TO THE COMPANY;
(B) ACCEPTING ANY COMMISSIONS, REFERRAL FEES, REBATES OR OTHER FORMS
OF CONSIDERATION FROM AN ATTORNEY, LAW FIRM, MEDICAL PROVIDER, CHIRO-
PRACTOR OR PHYSICAL THERAPIST OR ANY OF THEIR EMPLOYEES;
(C) INTENTIONALLY ADVERTISING MATERIALLY FALSE OR MISLEADING INFORMA-
TION REGARDING ITS PRODUCTS OR SERVICES;
(D) REFERRING, IN FURTHERANCE OF AN INITIAL LEGAL FUNDING, A CUSTOMER
OR POTENTIAL CUSTOMER TO A SPECIFIC ATTORNEY, LAW FIRM, MEDICAL PROVID-
ER, CHIROPRACTOR OR PHYSICAL THERAPIST OR ANY OF THEIR EMPLOYEES;
PROVIDED, HOWEVER, IF A CUSTOMER NEEDS LEGAL REPRESENTATION, THE COMPANY
MAY REFER THE CUSTOMER TO A LOCAL OR STATE BAR ASSOCIATION REFERRAL
SERVICE;
(E) KNOWINGLY PROVIDING FUNDING TO A CONSUMER WHO HAS PREVIOUSLY
ASSIGNED AND/OR SOLD A PORTION OF THE CONSUMER'S RIGHT TO PROCEEDS FROM
HIS OR HER LEGAL CLAIM WITHOUT FIRST MAKING PAYMENT TO AND/OR PURCHASING
A PRIOR UNSATISFIED CONSUMER LITIGATION FUNDING COMPANY'S ENTIRE FUNDED
AMOUNT AND CONTRACTED CHARGES, UNLESS A LESSER AMOUNT IS OTHERWISE
AGREED TO IN WRITING BY THE CONSUMER LITIGATION FUNDING COMPANIES,
EXCEPT THAT MULTIPLE COMPANIES MAY AGREE TO CONTEMPORANEOUSLY PROVIDE
FUNDING TO A CONSUMER PROVIDED THAT THE CONSUMER AND THE CONSUMER'S
ATTORNEY CONSENT TO THE ARRANGEMENT IN WRITING;
(F) RECEIVING ANY RIGHT TO, OR MAKING, ANY DECISIONS WITH RESPECT TO
THE CONDUCT OF THE UNDERLYING LEGAL CLAIM OR ANY SETTLEMENT OR RESOL-
UTION THEREOF. THE RIGHT TO MAKE SUCH DECISIONS SHALL REMAIN SOLELY WITH
THE CONSUMER AND THE ATTORNEY IN THE LEGAL CLAIM;
(G) ATTEMPTING TO OBTAIN A WAIVER OF ANY REMEDY OR RIGHT BY THE
CONSUMER, INCLUDING BUT NOT LIMITED TO THE RIGHT TO TRIAL BY JURY; AND
(H) KNOWINGLY PAYING OR OFFERING TO PAY FOR COURT COSTS, FILING FEES
OR ATTORNEY'S FEES EITHER DURING OR AFTER THE RESOLUTION OF THE LEGAL
CLAIM, USING FUNDS FROM THE CONSUMER LITIGATION FUNDING TRANSACTION.
2. AN ATTORNEY OR LAW FIRM RETAINED BY THE CONSUMER IN THE LEGAL CLAIM
SHALL NOT HAVE A FINANCIAL INTEREST IN THE CONSUMER LITIGATION FUNDING
COMPANY OFFERING CONSUMER LITIGATION FUNDING TO THAT CONSUMER.
3. ANY ATTORNEY WHO HAS REFERRED THE CONSUMER TO HIS OR HER RETAINED
ATTORNEY SHALL NOT HAVE A FINANCIAL INTEREST IN THE CONSUMER LITIGATION
FUNDING COMPANY OFFERING CONSUMER LITIGATION FUNDING TO THAT CONSUMER.
4. THE ATTORNEY MAY ONLY DISCLOSE PRIVILEGED INFORMATION TO THE
CONSUMER LITIGATION FUNDING COMPANY WITH THE WRITTEN CONSENT OF THE
CONSUMER.
5. NOTWITHSTANDING ANY PROVISION OF LAW TO THE CONTRARY, CHARGES PAID
TO A CONSUMER LITIGATION FUNDING COMPANY BY OR ON BEHALF OF A CONSUMER
UNDER THIS ARTICLE SHALL NOT EXCEED TWENTY-FIVE PER CENTUM PER ANNUM OR
ITS EQUIVALENT RATE FOR A LONGER OR SHORTER PERIOD. ANY CONTRACT WHICH
EXCEEDS SUCH RATE SHALL BE CONSIDERED USURIOUS AS DEFINED BY SECTION
5-501 OF THE GENERAL OBLIGATIONS LAW.
§ 899-FFF. CONTRACTED AMOUNTS. THE CONTRACTED AMOUNT TO BE PAID TO THE
CONSUMER LITIGATION FUNDING COMPANY SHALL BE A PREDETERMINED AMOUNT
BASED UPON INTERVALS OF TIME FROM THE FUNDING DATE THROUGH THE RESOL-
UTION DATE, AND SHALL NOT BE DETERMINED AS A PERCENTAGE OF THE RECOVERY
FROM THE LEGAL CLAIM.
§ 899-GGG. DISCLOSURES. ALL CONSUMER LITIGATION FUNDING CONTRACTS
SHALL CONTAIN THE DISCLOSURES SPECIFIED IN THIS SECTION, WHICH SHALL
CONSTITUTE MATERIAL TERMS OF THE CONTRACT. UNLESS OTHERWISE SPECIFIED,
A. 1270--A 5
SUCH DISCLOSURES SHALL BE TYPED IN AT LEAST TWELVE POINT BOLD TYPE FONT
AND BE PLACED CLEARLY AND CONSPICUOUSLY WITHIN THE CONTRACT, AS FOLLOWS:
1. ON THE FRONT PAGE UNDER APPROPRIATE HEADINGS, LANGUAGE SPECIFYING:
(A) THE FUNDED AMOUNT TO BE PAID TO THE CONSUMER BY THE CONSUMER LITI-
GATION FUNDING COMPANY;
(B) AN ITEMIZATION OF ONE-TIME CHARGES;
(C) THE MAXIMUM TOTAL AMOUNT TO BE ASSIGNED BY THE CONSUMER TO THE
COMPANY, INCLUDING THE FUNDED AMOUNT AND ALL CHARGES; AND
(D) A PAYMENT SCHEDULE TO INCLUDE THE FUNDED AMOUNT AND CHARGES, LIST-
ING ALL DATES AND THE AMOUNT DUE AT THE END OF EACH ONE HUNDRED EIGHTY
DAY PERIOD FROM THE FUNDING DATE, UNTIL THE DATE THE MAXIMUM AMOUNT DUE
TO THE COMPANY PURSUANT TO THE CONTRACT IS PAID.
2. PURSUANT TO THE PROVISIONS SET FORTH IN THIS SECTION, WITHIN THE
BODY OF THE CONTRACT: "CONSUMER'S RIGHT TO CANCELLATION: YOU MAY CANCEL
THIS CONTRACT WITHOUT PENALTY OR FURTHER OBLIGATION WITHIN TEN BUSINESS
DAYS AFTER THE FUNDING DATE IF YOU RETURN TO THE CONSUMER LITIGATION
FUNDING COMPANY THE FULL AMOUNT OF THE DISBURSED FUNDS."
3. THE CONSUMER LITIGATION FUNDING COMPANY SHALL HAVE NO ROLE IN
DECIDING WHETHER, WHEN AND HOW MUCH THE LEGAL CLAIM IS SETTLED FOR,
HOWEVER, THE CONSUMER AND CONSUMER'S ATTORNEY MUST NOTIFY THE COMPANY OF
THE OUTCOME OF THE LEGAL CLAIM BY SETTLEMENT OR ADJUDICATION PRIOR TO
THE RESOLUTION DATE. THE COMPANY MAY SEEK UPDATED INFORMATION ABOUT THE
STATUS OF THE LEGAL CLAIM BUT IN NO EVENT SHALL THE COMPANY INTERFERE
WITH THE INDEPENDENT PROFESSIONAL JUDGEMENT OF THE ATTORNEY IN THE
HANDLING OF THE LEGAL CLAIM OR ANY SETTLEMENT THEREOF.
4. WITHIN THE BODY OF THE CONTRACT, IN ALL CAPITAL LETTERS IN AT LEAST
TWELVE POINT BOLD TYPE FONT CONTAINED WITHIN A BOX: "THE FUNDED AMOUNT
AND AGREED UPON CHARGES SHALL BE PAID ONLY FROM THE PROCEEDS OF YOUR
LEGAL CLAIM, AND SHALL BE PAID ONLY TO THE EXTENT THAT THERE ARE AVAIL-
ABLE PROCEEDS FROM YOUR LEGAL CLAIM. YOU WILL NOT OWE (INSERT NAME OF
THE CONSUMER LITIGATION FUNDING COMPANY) ANYTHING IF THERE ARE NO
PROCEEDS FROM YOUR LEGAL CLAIM, UNLESS YOU HAVE VIOLATED ANY MATERIAL
TERM OF THIS CONTRACT OR YOU HAVE COMMITTED FRAUD AGAINST (INSERT NAME
OF CONSUMER LITIGATION FUNDING COMPANY)."
5. LOCATED IMMEDIATELY ABOVE THE PLACE ON THE CONTRACT WHERE THE
CONSUMER'S SIGNATURE IS REQUIRED, IN TWELVE POINT BOLD TYPE FONT: "DO
NOT SIGN THIS CONTRACT BEFORE YOU READ IT COMPLETELY. DO NOT SIGN THIS
CONTRACT IF IT CONTAINS ANY BLANK SPACES. YOU ARE ENTITLED TO A
COMPLETELY FILLED-IN COPY OF THE CONTRACT BEFORE YOU SIGN THIS CONTRACT.
YOU SHOULD OBTAIN THE ADVICE OF ANY ATTORNEY. DEPENDING ON THE CIRCUM-
STANCES, YOU MAY WANT TO CONSULT A TAX, PUBLIC OR PRIVATE BENEFITS PLAN-
NING, OR FINANCIAL PROFESSIONAL. YOU ACKNOWLEDGE THAT YOUR ATTORNEY IN
THE LEGAL CLAIM HAS PROVIDED NO TAX, PUBLIC OR PRIVATE BENEFIT PLANNING,
OR FINANCIAL ADVICE REGARDING THIS TRANSACTION. YOU FURTHER ACKNOWLEDGE
THAT YOUR ATTORNEY HAS EXPLAINED THE TERMS AND CONDITIONS OF THE CONSUM-
ER LITIGATION FUNDING CONTRACT."
6. A COPY OF THE EXECUTED CONTRACT SHALL PROMPTLY BE DELIVERED TO THE
ATTORNEY FOR THE CONSUMER.
§ 899-HHH. VIOLATIONS. 1. ANY CONSUMER LITIGATION FUNDING COMPANY
FOUND IN WILLFUL VIOLATION OF ANY PROVISION OF THIS ARTICLE IN A SPECIF-
IC FUNDING CASE: (A) WAIVES ITS RIGHT TO RECOVER BOTH THE FUNDED AMOUNT
AND ANY AND ALL CHARGES, AS DEFINED IN SUBDIVISION TWO OF SECTION EIGHT
HUNDRED NINETY-NINE-CCC OF THIS ARTICLE, IN THAT PARTICULAR CASE; AND
(B) SHALL BE LIABLE FOR A CIVIL PENALTY OF NOT MORE THAN FIVE THOUSAND
DOLLARS FOR EACH VIOLATION, WHICH SHALL ACCRUE TO THE STATE OF NEW YORK
AND MAY BE RECOVERED IN A CIVIL ACTION BROUGHT BY THE ATTORNEY GENERAL.
A. 1270--A 6
2. NOTHING IN THIS ARTICLE SHALL BE CONSTRUED TO RESTRICT THE EXERCISE
OF POWERS OR THE PERFORMANCE OF THE DUTIES OF THE NEW YORK STATE ATTOR-
NEY GENERAL, WHICH HE OR SHE IS AUTHORIZED TO EXERCISE OR PERFORM BY
LAW.
§ 899-III. ASSIGNABILITY; LIENS. 1. THE CONTINGENT RIGHT TO RECEIVE AN
AMOUNT OF THE POTENTIAL PROCEEDS OF A LEGAL CLAIM IS ASSIGNABLE BY A
CONSUMER.
2. ONLY ATTORNEY'S LIENS RELATED TO THE LEGAL CLAIM WHICH IS THE
SUBJECT OF THE CONSUMER LITIGATION FUNDING OR MEDICARE OR OTHER STATUTO-
RY LIENS RELATED TO THE LEGAL CLAIM SHALL TAKE PRIORITY OVER ANY LIEN OF
THE CONSUMER LITIGATION FUNDING COMPANY. ALL OTHER LIENS SHALL TAKE
PRIORITY BY NORMAL OPERATION OF LAW.
§ 899-JJJ. EFFECT OF COMMUNICATION ON PRIVILEGES. ALL COMMUNICATION
BETWEEN THE CONSUMER'S ATTORNEY IN THE LEGAL CLAIM AND THE CONSUMER
LEGAL FUNDING COMPANY AS IT PERTAINS TO THE CONSUMER LEGAL FUNDING SHALL
FALL WITHIN THE SCOPE OF THE ATTORNEY CLIENT PRIVILEGE, INCLUDING, WITH-
OUT LIMITATION, THE WORK-PRODUCT DOCTRINE.
§ 899-KKK. REGISTRATION. 1. UNLESS A CONSUMER LITIGATION FUNDING
COMPANY HAS FIRST REGISTERED WITH THE STATE OF NEW YORK PURSUANT TO THIS
ARTICLE, THE COMPANY MAY NOT ENGAGE IN THE BUSINESS OF CONSUMER LITI-
GATION FUNDING IN THIS STATE.
2. AN APPLICANT'S REGISTRATION MUST BE FILED IN THE MANNER PRESCRIBED
BY THE SECRETARY OF STATE AND MUST CONTAIN ALL THE INFORMATION REQUIRED
BY THE DEPARTMENT OF STATE TO MAKE AN EVALUATION OF THE CHARACTER AND
FITNESS OF THE APPLICANT COMPANY. THE INITIAL APPLICATION MUST BE ACCOM-
PANIED BY A FIVE HUNDRED DOLLAR FEE. A RENEWAL REGISTRATION MUST INCLUDE
A TWO HUNDRED DOLLAR FEE. A REGISTRATION MUST BE RENEWED EVERY TWO YEARS
AND EXPIRES ON THE THIRTIETH OF SEPTEMBER.
3. A CERTIFICATE OF REGISTRATION MAY NOT BE ISSUED UNLESS THE DEPART-
MENT OF STATE, UPON INVESTIGATION, FINDS THAT THE CHARACTER AND FITNESS
OF THE APPLICANT COMPANY, AND OF THE OFFICERS AND DIRECTORS THEREOF, ARE
SUCH AS TO WARRANT BELIEF THAT THE BUSINESS WILL BE OPERATED HONESTLY
AND FAIRLY WITHIN THE PURPOSES OF THIS ARTICLE.
4. EVERY REGISTRANT SHALL ALSO, AT THE TIME OF FILING SUCH APPLICA-
TION, FILE WITH THE DEPARTMENT OF STATE, IF THE DEPARTMENT OF STATE SO
REQUIRES, A BOND SATISFACTORY TO THE DEPARTMENT OF STATE IN AN AMOUNT
NOT TO EXCEED FIFTY THOUSAND DOLLARS. IN LIEU OF THE BOND AT THE OPTION
OF THE REGISTRANT, THE REGISTRANT MAY POST AN IRREVOCABLE LETTER OF
CREDIT. THE TERMS OF THE BOND MUST RUN CONCURRENT WITH THE PERIOD OF
TIME DURING WHICH THE REGISTRATION WILL BE IN EFFECT. THE BOND MUST
PROVIDE THAT THE REGISTRANT WILL FAITHFULLY CONFORM TO AND ABIDE BY THE
PROVISIONS OF THIS ARTICLE AND TO ALL RULES LAWFULLY MADE BY THE ADMIN-
ISTRATOR UNDER THIS ACT AND TO ANY SUCH PERSON OR PERSONS ANY AND ALL
AMOUNTS OF MONEY THAT MAY BECOME DUE OR OWING TO THE STATE OR TO SUCH
PERSON OR PERSONS FROM THE REGISTRANT UNDER AND BY VIRTUE OF THIS ARTI-
CLE DURING THE PERIOD FOR WHICH THE BOND IS GIVEN.
5. UPON WRITTEN REQUEST, THE APPLICANT SHALL BE ENTITLED TO A HEARING
ON THE QUESTION OF THE APPLICANT'S QUALIFICATIONS FOR REGISTRATION IF:
(A) THE DEPARTMENT OF STATE HAS NOTIFIED THE APPLICANT IN WRITING THAT
THE APPLICATION HAS BEEN DENIED, OR
(B) THE DEPARTMENT OF STATE HAS NOT ISSUED A REGISTRATION WITHIN SIXTY
DAYS AFTER THE APPLICATION FOR THE REGISTRATION WAS FILED.
6. A REQUEST FOR A HEARING MAY NOT BE MADE MORE THAN FIFTEEN DAYS
AFTER THE DEPARTMENT HAS MAILED A WRITTEN NOTICE TO THE APPLICANT THAT
THE APPLICATION HAS BEEN DENIED AND STATING IN SUBSTANCE THE DEPARTMENT
OF STATE'S FINDINGS SUPPORTING DENIAL OF THE APPLICATION.
A. 1270--A 7
7. NOTWITHSTANDING THE PRIOR APPROVAL REQUIREMENT OF SUBDIVISION ONE
OF THIS SECTION, A CONSUMER LITIGATION FUNDING COMPANY THAT REGISTERED
WITH THE DEPARTMENT OF STATE BETWEEN THE EFFECTIVE DATE OF THIS ARTICLE
OR WHEN THE DEPARTMENT OF STATE HAS MADE APPLICATIONS AVAILABLE TO THE
PUBLIC, WHICHEVER IS LATER, AND ONE HUNDRED EIGHTY DAYS THEREAFTER MAY
ENGAGE IN CONSUMER LITIGATION FUNDING WHILE THE COMPANY'S REGISTRATION
IS PENDING APPROVAL WITH THE DEPARTMENT OF STATE. ALL FUNDING AGREEMENTS
ENTERED INTO PRIOR TO THE EFFECTIVE DATE OF THIS ARTICLE ARE NOT SUBJECT
TO THE TERMS OF THIS ARTICLE.
8. NO CONSUMER LITIGATION FUNDING COMPANY MAY USE ANY FORM OF CONSUMER
LITIGATION FUNDING CONTRACT IN THIS STATE UNLESS IT HAS BEEN FILED WITH
THE DEPARTMENT OF STATE IN ACCORDANCE WITH THE FILING PROCEDURES SET
FORTH BY THE SECRETARY OF STATE.
9. THE SECRETARY OF STATE IS HEREBY AUTHORIZED TO ADOPT RULES AND
REGULATIONS TO IMPLEMENT THE PROVISIONS OF THIS SECTION AS NEEDED.
§ 899-LLL. REPORTING. 1. EACH CONSUMER LITIGATION FUNDING COMPANY THAT
ENGAGES IN BUSINESS IN THE STATE SHALL SUBMIT A REPORT TO THE DEPARTMENT
OF STATE NO LATER THAN THE THIRTY-FIRST OF JANUARY OF EACH YEAR SPECIFY-
ING:
(A) NUMBER OF CONSUMER LITIGATION FUNDINGS BY THE COMPANY;
(B) SUMMATION OF FUNDED AMOUNTS IN DOLLAR FIGURE; AND
(C) ANNUAL PERCENTAGE CHARGED TO EACH CONSUMER WHERE REPAYMENT WAS
MADE.
2. THE DEPARTMENT OF STATE SHALL MAKE SUCH INFORMATION AVAILABLE TO
THE PUBLIC, IN A MANNER WHICH MAINTAINS THE CONFIDENTIALITY OF THE NAME
OF EACH COMPANY AND CONSUMER, NO LATER THAN NINETY DAYS AFTER THE
REPORTS ARE SUBMITTED.
§ 899-MMM. SEVERABILITY. IF ANY PROVISION OF THIS ARTICLE IS, FOR ANY
REASON, DECLARED UNCONSTITUTIONAL OR INVALID, IN WHOLE OR IN PART, BY
ANY COURT OF COMPETENT JURISDICTION, SUCH PORTION SHALL BE DEEMED SEVER-
ABLE, AND SUCH UNCONSTITUTIONALITY OR INVALIDITY SHALL NOT AFFECT THE
VALIDITY OF THE REMAINING PORTIONS OF THIS ARTICLE, WHICH REMAINING
PORTIONS SHALL CONTINUE IN FULL FORCE AND EFFECT.
§ 4. This act shall take effect on the one hundred eightieth day after
it shall have become a law; provided, however, it shall not apply or in
any way affect or invalidate any consumer litigation funding previously
effectuated prior to the effective date of this act.