Assembly Bill A9442

                             
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   9442
 
                           I N  A S S E M B L Y
 
                              January 6, 2026
                                ___________
 
 Introduced  by  M.  of  A.  MAGNARELLI  -- read once and referred to the
   Committee on Consumer Affairs and Protection
 
 AN ACT to amend the financial services law, in  relation  to  litigation
   funding;  to  amend a chapter of the laws of 2025 amending the general
   business law relating to consumer litigation funding, as  proposed  in
   legislative  bills  numbers  S.  1104-A  and A. 804-C, relating to the
   legislative intent and the effectiveness thereof; and to repeal  arti-
   cle  39-H  of the general business law relating to customer litigation
   funding
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1. Sections 1 and 2 of a chapter of the laws of 2025 amending
 the general business law relating to  consumer  litigation  funding,  as
 proposed  in  legislative  bills  numbers  S.  1104-A  and A. 804-C, are
 amended to read 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] CONTRACTS,  this
 act  establishes that such transactions should be subject to state regu-
 lation and sets forth  requirements  regarding  disclosure,  [licensing]
 REGISTRATION,  funding company and attorney responsibilities and limita-
 tions, violations and other items.
   § 2. Article 39-H of the general business law, as added by  a  chapter
 of  the  laws  of  2025  amending  the  general business law relating to
 consumer litigation funding, as proposed in legislative bills numbers S.
 1104-A and A. 804-C, is REPEALED.
   § 3. The financial services law is amended by adding a new article  10
 to read as follows:
                                ARTICLE 10
                            LITIGATION FUNDING
 SECTION 1001. DEFINITIONS.
         1002. CONTRACT REQUIREMENTS; RIGHT OF RESCISSION.
         1003. PROHIBITIONS AND CHARGE LIMITATIONS.
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD00080-08-6
 A. 9442                             2
 
         1004. PAYMENT OF CHARGES.
         1005. DISCLOSURES.
         1006. VIOLATIONS.
         1007. ASSIGNABILITY; LIENS.
         1008. EFFECT OF COMMUNICATION ON PRIVILEGES.
         1009. REGISTRATION.
         1010. REPORTING.
         1011. SEVERABILITY.
   §  1001.  DEFINITIONS.  AS  USED  IN THIS ARTICLE, THE FOLLOWING TERMS
 SHALL HAVE THE FOLLOWING MEANINGS:
   (A) "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 LITIGATION  FUND-
 ING CONTRACT.
   (B) "CHARGES" MEANS ANYTHING TO BE PAID TO A LITIGATION FUNDING COMPA-
 NY  BY  OR  ON  BEHALF  OF  A  CONSUMER PURSUANT TO A LITIGATION FUNDING
 CONTRACT. CHARGES INCLUDES ALL ADMINISTRATIVE, ORIGINATION, UNDERWRITING
 OR OTHER FEES, INCLUDING INTEREST AND PAYMENT OF THE FUNDED  AMOUNT,  NO
 MATTER HOW DENOMINATED.
   (C)  "FUNDING  LITIGATION"  OR "TO FUND LITIGATION" MEANS PROVIDING NO
 MORE THAN FIVE HUNDRED THOUSAND DOLLARS TO A CONSUMER  IN  EXCHANGE  FOR
 THE  CONSUMER'S AGREEMENT TO PAY THE LITIGATION FUNDING COMPANY FROM THE
 POTENTIAL PROCEEDS OF ANY SETTLEMENT, JUDGMENT, AWARD  OR  VERDICT  THAT
 MAY BE PAID TO RESOLVE THAT CONSUMER'S LEGAL CLAIM.
   (D)  "LITIGATION  FUNDING  CONTRACT"  OR "CONTRACT" MEANS AN AGREEMENT
 BETWEEN A LITIGATION FUNDING COMPANY AND A CONSUMER TO FUND LITIGATION.
   (E) "LITIGATION FUNDING COMPANY" OR "COMPANY" MEANS A PERSON OR ENTITY
 THAT IS ENGAGED IN THE BUSINESS OF FUNDING LITIGATION. THIS  TERM  SHALL
 NOT  INCLUDE  AN  IMMEDIATE FAMILY MEMBER OF THE CONSUMER OR AN ATTORNEY
 REPRESENTING A CONSUMER ON A CONTINGENCY BASIS THAT IS NOT A  LITIGATION
 FUNDING COMPANY ON THE BASIS OF SUCH REPRESENTATION.
   (F)  "CONSUMER"  MEANS  A NATURAL PERSON WHO HAS A LEGAL CLAIM AND WHO
 RESIDES OR IS DOMICILED IN NEW YORK STATE AND THE CLAIM IS  OR  WILL  BE
 FILED IN A NEW YORK STATE OR FEDERAL COURT.
   (G)  "FUNDED  AMOUNT"  MEANS  THE  AMOUNT OF MONIES PROVIDED TO, OR ON
 BEHALF OF, A CONSUMER PURSUANT TO A LITIGATION FUNDING CONTRACT.
   (H) "FUNDING DATE" MEANS THE DATE ON WHICH THE FUNDED AMOUNT IS TRANS-
 FERRED TO THE CONSUMER BY THE LITIGATION FUNDING COMPANY.
   (I) "IMMEDIATE FAMILY MEMBER" MEANS A PARENT; SIBLING; CHILD BY BLOOD,
 ADOPTION, OR MARRIAGE; SPOUSE; GRANDPARENT; OR GRANDCHILD.
   (J) "LEGAL CLAIM" MEANS A CIVIL CLAIM OR CAUSE OF ACTION.
   § 1002. CONTRACT REQUIREMENTS; RIGHT OF RESCISSION. (A) ALL LITIGATION
 FUNDING CONTRACTS SHALL MEET THE FOLLOWING REQUIREMENTS:
   (I) A CONTRACT SHALL BE WRITTEN IN A CLEAR AND COHERENT  MANNER  USING
 WORDS  WITH COMMON, EVERYDAY MEANINGS TO ENABLE THE AVERAGE CONSUMER WHO
 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;
   (II) THE CONTRACT SHALL BE COMPLETELY FILLED IN WHEN PRESENTED TO  THE
 CONSUMER FOR SIGNATURE;
   (III)  THE  CONTRACT  SHALL CONTAIN, IN TWELVE POINT BOLD TYPE FONT, A
 RIGHT OF RESCISSION, ALLOWING THE CONSUMER TO CANCEL THE CONTRACT  WITH-
 A. 9442                             3
 
 OUT PENALTY OR FURTHER OBLIGATION IF, WITHIN TEN BUSINESS DAYS AFTER THE
 FUNDING DATE, THE CONSUMER RETURNS TO THE LITIGATION FUNDING COMPANY THE
 FULL AMOUNT OF THE FUNDED AMOUNT;
   (IV)  THE  CONTRACT  SHALL CONTAIN A SPACE FOR THE CONSUMER TO INITIAL
 EACH PAGE;
   (V) A STATEMENT THAT THERE IS NOTHING TO BE PAID BY THE CONSUMER OTHER
 THAN THE CHARGES THAT ARE DISCLOSED IN THE CONTRACT;
   (VI) 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 UNDER  ALL  CONTRACTS,
 PROVIDED  THAT  A  LITIGATION FUNDING COMPANY MAY NOT OBTAIN AN INTEREST
 THAT, IN AGGREGATE, WOULD RESULT  IN  CHARGES  THAT  EXCEED  THE  FUNDED
 AMOUNT  PLUS TWENTY-FIVE PERCENT OF THE GROSS PROCEEDS OF THE CONSUMER'S
 LEGAL CLAIM;
   (VII) A STATEMENT OF THE MAXIMUM CHARGES THE CONSUMER MAY BE OBLIGATED
 TO PAY UNDER THE CONTRACT;
   (VIII) A STATEMENT THAT A CONSUMER MAY  BE  LIABLE  FOR  A  BREACH  OF
 CONTRACT  CLAIM  IF THEY MATERIALLY BREACH A CONTRACT OR ENGAGE IN FRAUD
 OR MATERIAL MISREPRESENTATION RELATING TO A CONTRACT; AND
   (IX) A CLEAR EXPLANATION OF HOW AND WHEN THE CONSUMER IS OBLIGATED  TO
 PAY THE CHARGES TO THE LITIGATION FUNDING COMPANY, INCLUDING AN EXPLANA-
 TION  OF THE CONSUMER'S PAYMENT OBLIGATIONS IF THE PROCEEDS OF THE LEGAL
 CLAIM WILL BE PAID TO THE CONSUMER OVER TIME.
   (B) THE CONTRACT SHALL CONTAIN A WRITTEN ACKNOWLEDGEMENT BY THE ATTOR-
 NEY RETAINED BY THE CONSUMER IN THE LEGAL  CLAIM  THAT  ATTESTS  TO  THE
 FOLLOWING:
   (I) THE ATTORNEY HAS REVIEWED THE MANDATORY DISCLOSURES IN SECTION ONE
 THOUSAND FIVE OF THIS ARTICLE WITH THE CONSUMER;
   (II)  THE  ATTORNEY IS BEING PAID ON A CONTINGENCY BASIS PURSUANT TO A
 WRITTEN FEE AGREEMENT;
   (III) 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;
   (IV)  THE  ATTORNEY  IS  OBLIGATED  TO  TAKE  ALL  REASONABLE STEPS TO
 DISBURSE FUNDS FROM THE LEGAL CLAIM AND TO ENSURE THAT THE TERMS OF  THE
 LITIGATION FUNDING CONTRACT ARE FULFILLED;
   (V)  THE  ATTORNEY  HAS NOT RECEIVED A REFERRAL FEE OR OTHER CONSIDER-
 ATION FROM THE LITIGATION FUNDING COMPANY IN CONNECTION WITH  THE  LITI-
 GATION  FUNDING, NOR WILL THE ATTORNEY RECEIVE SUCH FEE OR OTHER CONSID-
 ERATION IN THE FUTURE; AND
   (VI) THE ATTORNEY IN THE LEGAL CLAIM HAS PROVIDED NO  TAX,  PUBLIC  OR
 PRIVATE  BENEFIT  PLANNING,  OR  FINANCIAL  ADVICE REGARDING THIS TRANS-
 ACTION.
   (C) IN THE EVENT THAT THE ACKNOWLEDGEMENT REQUIRED PURSUANT  TO  PARA-
 GRAPH  (III)  OF  SUBSECTION (B) 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.
   (D)  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 PENAL-
 TY ON A LITIGATION FUNDING CONTRACT SHALL BE UNENFORCEABLE.
   § 1003. PROHIBITIONS AND CHARGE LIMITATIONS. LITIGATION FUNDING COMPA-
 NIES SHALL BE PROHIBITED FROM:
 A. 9442                             4
 
   (A) PAYING OR OFFERING TO PAY COMMISSIONS, REFERRAL FEES, OR ANY OTHER
 FORM 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 ANY OTHER
 FORM OF CONSIDERATION FROM AN  ATTORNEY,  LAW  FIRM,  MEDICAL  PROVIDER,
 CHIROPRACTOR OR PHYSICAL THERAPIST OR ANY OF THEIR EMPLOYEES;
   (C)  ADVERTISING  MATERIALLY FALSE OR MISLEADING INFORMATION REGARDING
 ITS PRODUCTS OR SERVICES;
   (D) REFERRING A CUSTOMER OR POTENTIAL CUSTOMER TO A SPECIFIC ATTORNEY,
 LAW FIRM, MEDICAL PROVIDER, CHIROPRACTOR OR PHYSICAL THERAPIST OR ANY OF
 THEIR EMPLOYEES; PROVIDED, HOWEVER, IF A CUSTOMER NEEDS LEGAL  REPRESEN-
 TATION, THE COMPANY MAY REFER THE CUSTOMER TO A LOCAL OR STATE BAR ASSO-
 CIATION REFERRAL SERVICE;
   (E)  KNOWINGLY  PROVIDING  FUNDING  TO  A  CONSUMER WHO HAS PREVIOUSLY
 SIGNED A LITIGATION FUNDING CONTRACT WITH A ANOTHER  LITIGATION  FUNDING
 COMPANY  FOR THE SAME CLAIM WITHOUT FIRST ACQUIRING OR EXTINGUISHING THE
 CONSUMER'S  OBLIGATIONS  PURSUANT  TO  THE  PRIOR   LITIGATION   FUNDING
 CONTRACT, PROVIDED THAT NOTHING HEREIN SHALL PROHIBIT MULTIPLE COMPANIES
 FROM  AGREEING  TO  CONTEMPORANEOUSLY  PROVIDE  FUNDING  TO  A  CONSUMER
 PROVIDED THAT THE CONSUMER AND THE CONSUMER'S ATTORNEY  CONSENT  TO  THE
 ARRANGEMENT  IN WRITING AS LONG AS THE INTEREST HELD BY THOSE LITIGATION
 FUNDING COMPANIES, IN AGGREGATE, DOES NOT EXCEED THE FUNDED AMOUNT  PLUS
 TWENTY-FIVE PERCENT OF THE PROCEEDS OF THE CONSUMER'S LEGAL CLAIM;
   (F)  INFLUENCING OR ATTEMPTING TO INFLUENCE ANY DECISIONS WITH RESPECT
 TO THE CONDUCT OF THE CONSUMER'S LEGAL CLAIM OR ANY SETTLEMENT OR RESOL-
 UTION THEREOF. THE RIGHT TO MAKE SUCH DECISIONS SHALL REMAIN SOLELY WITH
 THE CONSUMER AND THE CONSUMER'S ATTORNEY IN THE LEGAL CLAIM;
   (G) OBTAINING A WAIVER OF ANY REMEDY OR RIGHT BY THE CONSUMER, INCLUD-
 ING BUT NOT LIMITED TO THE RIGHT TO TRIAL BY JURY;
   (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 LITIGATION FUNDING TRANSACTION;
   (I) ENTERING INTO A LITIGATION FUNDING CONTRACT WITH  A  CONSUMER  WHO
 THE  LITIGATION  FUNDING  COMPANY KNOWS IS REPRESENTED BY AN ATTORNEY OR
 LAW FIRM IN THE LEGAL CLAIM THAT HAS A FINANCIAL INTEREST IN  THE  LITI-
 GATION FUNDING COMPANY OFFERING LITIGATION FUNDING TO THAT CONSUMER;
   (J) REQUIRING AN ATTORNEY WHO REPRESENTS A CONSUMER TO DISCLOSE PRIVI-
 LEGED  INFORMATION TO THE LITIGATION FUNDING COMPANY WITHOUT THE WRITTEN
 CONSENT OF THE CONSUMER. THE ATTORNEY WHO REPRESENTS THE CONSUMER  SHALL
 DISCLOSE TO THE LITIGATION FUNDING COMPANY THE AMOUNT OF THE PROCEEDS OF
 THE SETTLEMENT, JUDGMENT, AWARD OR VERDICT;
   (K)  REQUIRING  A  CONSUMER  TO  PAY  CHARGES  THAT EXCEED TWENTY-FIVE
 PERCENT OF THE GROSS PROCEEDS FROM THE APPLICABLE LEGAL CLAIM  PLUS  THE
 FUNDED AMOUNT;
   (L)  REQUIRING  A  CONSUMER TO PAY ANYTHING THAT EXCEEDS THE AVAILABLE
 PROCEEDS FROM A RESOLUTION OF THE CONSUMER'S CLAIM;
   (M) PROVIDING MORE THAN FIVE HUNDRED THOUSAND DOLLARS TO A CONSUMER TO
 FUND LITIGATION; AND
   (N) ENTERING INTO A LITIGATION FUNDING CONTRACT WITH A CONSUMER IF THE
 LITIGATION FUNDING COMPANY HAS ANY REASONABLE BASIS TO BELIEVE THAT  THE
 CONSUMER'S LEGAL CLAIM IS FRIVOLOUS, BASED ON A FALSE STATEMENT OF FACTS
 OR OTHERWISE THAT IT IS NOT MERITORIOUS.
   §  1004.  PAYMENT  OF  CHARGES. A CONSUMER MAY ONLY BE REQUIRED TO PAY
 CHARGES TO A LITIGATION FUNDING COMPANY WHEN THE RESOLUTION  OF  ANY  OF
 THE  CONSUMER'S  LEGAL  CLAIMS  SUBJECT  TO A CONTRACT IS FINAL, RELATED
 A. 9442                             5
 
 APPEALS, IF ANY, HAVE BEEN RESOLVED, AND  PROCEEDS  OF  THE  SETTLEMENT,
 JUDGMENT, AWARD OR VERDICT HAVE BEEN RECEIVED BY THE CONSUMER'S COUNSEL.
   §  1005.  DISCLOSURES.  ALL LITIGATION FUNDING CONTRACTS SHALL CONTAIN
 THE DISCLOSURES SPECIFIED IN THIS SECTION, WHICH SHALL CONSTITUTE  MATE-
 RIAL TERMS OF THE CONTRACT. UNLESS OTHERWISE SPECIFIED, SUCH DISCLOSURES
 SHALL  BE  TYPED  IN  AT LEAST TWELVE POINT BOLD TYPE FONT AND BE PLACED
 CLEARLY AND CONSPICUOUSLY WITHIN THE CONTRACT, AS FOLLOWS:
   (A) ON THE FRONT PAGE UNDER APPROPRIATE HEADINGS, LANGUAGE SPECIFYING:
   (I) THE FUNDED AMOUNT;
   (II) AN ITEMIZATION OF ALL CHARGES;
   (III) A PAYMENT SCHEDULE TO HELP CONSUMERS UNDERSTAND  HOW  MUCH  THEY
 WILL  HAVE TO PAY IN CHARGES BASED ON DIFFERENT HYPOTHETICAL RESOLUTIONS
 OF THE CONSUMER'S LEGAL CLAIM; AND
   (IV) THE FOLLOWING STATEMENT IN AT LEAST TWELVE POINT TYPE FONT:  "THE
 MAXIMUM AMOUNT YOU MAY BE REQUIRED TO PAY CANNOT EXCEED 25% OF THE GROSS
 RECOVERED  AMOUNT RECEIVED FOR YOUR CLAIM PLUS THE AMOUNT PAID TO YOU BY
 THE LITIGATION FUNDING COMPANY, BUT ONLY TO THE EXTENT  THAT  THERE  ARE
 PROCEEDS AVAILABLE FROM YOUR LEGAL CLAIM."
   (B)  WITHIN  THE  BODY  OF  THE CONTRACT IN AT LEAST TWELVE POINT TYPE
 FONT: "CONSUMER'S RIGHT TO CANCELLATION: YOU MAY  CANCEL  THIS  CONTRACT
 WITHOUT PENALTY OR FURTHER OBLIGATION WITHIN TEN BUSINESS DAYS AFTER THE
 DATE  YOU RECEIVE THE PAYMENT FROM THE LITIGATION FUNDING COMPANY IF YOU
 RETURN TO  THE  LITIGATION  FUNDING  COMPANY  THE  FULL  AMOUNT  OF  THE
 DISBURSED FUNDS."
   (C)  WITHIN  THE  BODY  OF THE CONTRACT, AN EXPLANATION THAT THE LITI-
 GATION 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 PAYING THE COMPANY FROM THE
 PROCEEDS  OF ANY SETTLEMENT, JUDGMENT, AWARD OR VERDICT THAT MAY BE PAID
 TO RESOLVE THAT CONSUMER'S LEGAL CLAIM. 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 JUDGMENT OF  THE
 ATTORNEY IN THE HANDLING OF THE LEGAL CLAIM OR ANY SETTLEMENT THEREOF.
   (D)  WITHIN  THE  BODY  OF  THE CONTRACT, IN ALL CAPITAL LETTERS IN AT
 LEAST TWELVE POINT BOLD TYPE FONT CONTAINED WITHIN A  BOX:  "THE  AGREED
 UPON  CHARGES  SHALL BE PAID ONLY FROM ANY PROCEEDS OF YOUR LEGAL CLAIM,
 AND SHALL BE PAID ONLY TO THE EXTENT THAT THERE ARE  AVAILABLE  PROCEEDS
 FROM  YOUR  LEGAL CLAIM. YOU WILL NOT OWE (INSERT NAME OF THE 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  LITIGATION  FUNDING
 COMPANY)."
   (E)  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.
 DEPENDING ON THE CIRCUMSTANCES, YOU MAY WANT TO CONSULT A TAX, PUBLIC OR
 PRIVATE  BENEFITS  PLANNING,  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 CONTRACT.
 YOU FURTHER ACKNOWLEDGE THAT YOUR ATTORNEY HAS EXPLAINED THE  TERMS  AND
 CONDITIONS OF THE LITIGATION FUNDING CONTRACT."
   (F) A COPY OF THE EXECUTED CONTRACT SHALL PROMPTLY BE DELIVERED TO THE
 ATTORNEY FOR THE CONSUMER.
 A. 9442                             6
 
   (G)  THE FOLLOWING SHALL BE PRINTED WITHIN THE BODY OF THE CONTRACT IN
 ALL CAPITAL LETTERS IN AT LEAST TWELVE POINT BOLD TYPE  FONT:  "PURSUANT
 TO  THE  LAWS  OF  THE  STATE OF NEW YORK, THE MAXIMUM AMOUNT YOU MAY BE
 REQUIRED TO PAY CANNOT EXCEED 25% OF THE GROSS RECOVERED AMOUNT RECEIVED
 FOR  YOUR  CLAIM  PLUS  THE AMOUNT PAID TO YOU BY THE LITIGATION FUNDING
 COMPANY."
   § 1006. VIOLATIONS. (A) ANY LITIGATION FUNDING COMPANY FOUND IN  WILL-
 FUL  VIOLATION  OF  ANY  PROVISION OF THIS ARTICLE IN A SPECIFIC FUNDING
 CASE: (I) WAIVES ITS  RIGHT  TO  RECOVER  THE  CHARGES,  AS  DEFINED  IN
 SUBSECTION  (B)  OF  SECTION  ONE  THOUSAND ONE OF THIS ARTICLE, IN THAT
 PARTICULAR CASE; AND (II) 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.
   (B)  NOTHING  IN THIS ARTICLE SHALL BE CONSTRUED TO RESTRICT THE EXER-
 CISE OF POWERS OR THE PERFORMANCE OF THE DUTIES OF THE  NEW  YORK  STATE
 ATTORNEY  GENERAL, WHICH SUCH ATTORNEY GENERAL IS AUTHORIZED TO EXERCISE
 OR PERFORM BY LAW.
   § 1007. ASSIGNABILITY; LIENS. (A) THE CONTINGENT RIGHT TO  RECEIVE  AN
 AMOUNT  OF  THE  POTENTIAL  PROCEEDS OF A LEGAL CLAIM IS ASSIGNABLE BY A
 CONSUMER AND/OR LITIGATION FUNDING COMPANY.
   (B) ONLY ATTORNEY'S LIENS RELATED TO THE  LEGAL  CLAIM  WHICH  IS  THE
 SUBJECT OF THE LITIGATION FUNDING CONTRACT OR MEDICARE OR OTHER STATUTO-
 RY LIENS RELATED TO THE LEGAL CLAIM SHALL TAKE PRIORITY OVER ANY LIEN OF
 THE  LITIGATION  FUNDING COMPANY. ALL OTHER LIENS SHALL TAKE PRIORITY BY
 NORMAL OPERATION OF LAW.
   § 1008. EFFECT OF  COMMUNICATION  ON  PRIVILEGES.  ALL  COMMUNICATIONS
 BETWEEN  THE  CONSUMER'S  ATTORNEY IN THE LEGAL CLAIM AND THE LITIGATION
 FUNDING COMPANY AS IT PERTAINS TO THE LEGAL CLAIM THAT IS SUBJECT TO THE
 LITIGATION FUNDING CONTRACT SHALL NOT CONSTITUTE A WAIVER OF ANY  PRIVI-
 LEGE  OR  PROTECTION,  INCLUDING  BUT NOT LIMITED TO THE ATTORNEY CLIENT
 PRIVILEGE AND THE WORK-PRODUCT DOCTRINE.
   § 1009. REGISTRATION. (A) EXCEPT  AS  PROVIDED  IN  THIS  SECTION,  NO
 PERSON  MAY  ENGAGE  IN  LITIGATION  FUNDING IN THIS STATE WITHOUT BEING
 REGISTERED WITH THE DEPARTMENT. THE REGISTRATION REQUIREMENT  SHALL  NOT
 APPLY  TO  A  BANKING  ORGANIZATION  AS DEFINED IN SUBDIVISION ELEVEN OF
 SECTION TWO OF THE BANKING LAW OR A LICENSED LENDER LICENSED PURSUANT TO
 ARTICLE NINE OF THE BANKING LAW.
   (B) AN APPLICATION FOR REGISTRATION  SHALL  BE  FILED  IN  THE  MANNER
 PRESCRIBED  BY  THE  SUPERINTENDENT AND MUST CONTAIN ALL THE INFORMATION
 REQUIRED BY THE DEPARTMENT. THE APPLICATION SHALL BE  ACCOMPANIED  BY  A
 FIVE  HUNDRED  DOLLAR  FEE.  THE  SUPERINTENDENT SHALL HAVE THE POWER TO
 APPROVE OR DENY A REGISTRATION APPLICATION, BASED ON WHETHER SUCH APPLI-
 CATION IS COMPLETE, ACCURATE AND OTHERWISE IN COMPLIANCE WITH APPLICABLE
 LAWS OR REGULATIONS.
   (C) THE SUPERINTENDENT MAY REVOKE OR SUSPEND THE REGISTRATION  OF  ANY
 LITIGATION  FUNDING  COMPANY  IF,  UPON NOTICE AND A HEARING, THE SUPER-
 INTENDENT DETERMINES THAT THE LITIGATION FUNDING COMPANY OR ANY  MEMBER,
 PRINCIPAL,  OFFICER,  DIRECTOR  OR  CONTROLLING PERSON OF THE LITIGATION
 FUNDING COMPANY HAS:
   (I) COMMITTED A VIOLATION OF THE INSURANCE LAW, BANKING  LAW  OR  THIS
 CHAPTER  OR  ANY REGULATION PROMULGATED THEREUNDER, AN ORDER OR SUBPOENA
 OF THE SUPERINTENDENT OR THE HEAD OF ANOTHER STATE'S INSURANCE,  BANKING
 OR FINANCIAL SERVICES REGULATORY AGENCY OR FEDERAL AGENCY WITH AUTHORITY
 TO  REGULATE LITIGATION FUNDING COMPANIES, OR HAS VIOLATED ANY OTHER LAW
 A. 9442                             7
 
 IN THE COURSE OF ENGAGING IN THE BUSINESS OF A LITIGATION FUNDING COMPA-
 NY;
   (II)  PROVIDED MATERIALLY INCORRECT, MATERIALLY MISLEADING, MATERIALLY
 INCOMPLETE OR MATERIALLY UNTRUE INFORMATION IN THE REGISTRATION APPLICA-
 TION;
   (III) FAILED TO COMPLY WITH THE REQUIREMENTS OF THIS  ARTICLE  OR  ANY
 OTHER APPLICABLE PROVISION OF THE BANKING LAW OR THE INSURANCE LAW;
   (IV)  USED  FRAUDULENT, COERCIVE OR DISHONEST PRACTICES IN THE CONDUCT
 OF LITIGATION FUNDING COMPANY BUSINESS;
   (V) IMPROPERLY WITHHELD, MISAPPROPRIATED OR CONVERTED  ANY  MONIES  OR
 PROPERTIES  RECEIVED  IN  THE  COURSE OF BUSINESS IN THIS STATE OR ELSE-
 WHERE;
   (VI) ADMITTED OR BEEN FOUND TO HAVE COMMITTED ANY UNFAIR  TRADE  PRAC-
 TICE OR FRAUD; OR
   (VII)  HAD  ITS  REGISTRATION, OR ITS EQUIVALENT, DENIED, SUSPENDED OR
 REVOKED IN ANY OTHER STATE, PROVINCE, DISTRICT OR TERRITORY.
   (D) UPON THE REVOCATION OR SUSPENSION BY  THE  SUPERINTENDENT  OF  THE
 REGISTRATION  OF  A LITIGATION FUNDING COMPANY, THE SUPERINTENDENT SHALL
 FORTHWITH NOTIFY SUCH LITIGATION  FUNDING  COMPANY.  THE  REVOCATION  OR
 SUSPENSION  OF ANY REGISTRATION PURSUANT TO THIS SECTION SHALL TERMINATE
 OR SUSPEND, RESPECTIVELY, SUCH REGISTRATION IMMEDIATELY UPON  THE  ISSU-
 ANCE OF SUCH NOTICE.
   (E)  ALL LITIGATION FUNDING CONTRACTS ENTERED INTO PRIOR TO THE EFFEC-
 TIVE DATE OF THIS ARTICLE ARE NOT SUBJECT TO THE TERMS OF THIS ARTICLE.
   (F) A LITIGATION FUNDING COMPANY THAT HAS  FILED  AN  APPLICATION  FOR
 REGISTRATION WITH THE DEPARTMENT, WITHIN ONE HUNDRED EIGHTY DAYS OF WHEN
 THE  DEPARTMENT  FIRST MAKES SUCH APPLICATIONS AVAILABLE, MAY ENTER INTO
 LITIGATION FUNDING CONTRACTS, WHILE THEIR  APPLICATION  REMAINS  PENDING
 WITH THE DEPARTMENT.
   (G)  THE  SUPERINTENDENT IS HEREBY AUTHORIZED TO ADOPT RULES AND REGU-
 LATIONS TO IMPLEMENT THE PROVISIONS OF THIS ARTICLE AS NEEDED.
   § 1010. REPORTING. (A) BEGINNING IN TWO  THOUSAND  TWENTY-SEVEN,  EACH
 LITIGATION  FUNDING COMPANY THAT ENGAGES IN BUSINESS IN THIS STATE SHALL
 SUBMIT AN ANNUAL REPORT TO THE DEPARTMENT IN A FORM  AND  MANNER  DETER-
 MINED BY THE DEPARTMENT NO LATER THAN THE THIRTY-FIRST DAY OF JANUARY OF
 EACH YEAR SPECIFYING FOR THE PRECEDING CALENDAR YEAR:
   (I)  THE  NUMBER OF LITIGATION FUNDING CONTRACTS FOR WHICH THE CHARGES
 WERE PAID AND FOR EACH SUCH CONTRACT:
   (A) THE FUNDED AMOUNT;
   (B) THE AMOUNT PAID BY THE CONSUMER TO THE LITIGATION FUNDING COMPANY;
 AND
   (C) THE TOTAL NUMBER OF DAYS THAT ELAPSED BETWEEN THE FUNDING DATE AND
 THE DATE THE LAST PAYMENT OF THE CHARGES  WAS  MADE  TO  THE  LITIGATION
 FUNDING COMPANY BY THE CONSUMER.
   (II)  THE  NUMBER OF LITIGATION CONTRACTS THAT THE COMPANY HAS WRITTEN
 OFF AS BEING UNCOLLECTIBLE AND FOR EACH CONTRACT:
   (A) THE FUNDED AMOUNT; AND
   (B) THE TOTAL NUMBER OF DAYS THAT ELAPSED BETWEEN THE FUNDING DATE AND
 THE DATE THE LITIGATION FUNDING COMPANY WROTE OFF THE CONTRACT AS  BEING
 UNCOLLECTIBLE.
   (III)  THE NUMBER OF CASES INITIATED BY THE LITIGATION FUNDING AGAINST
 A CONSUMER.
   (B) THE DEPARTMENT  SHALL  MAKE  SUCH  INFORMATION  AVAILABLE  TO  THE
 PUBLIC,  IN  A MANNER WHICH MAINTAINS THE CONFIDENTIALITY OF THE NAME OF
 EACH COMPANY AND CONSUMER AND OTHER PERSONALLY IDENTIFIABLE  INFORMATION
 A. 9442                             8
 
 OF THE CONSUMER, NO LATER THAN NINETY DAYS AFTER THE REPORTS ARE SUBMIT-
 TED.
   §  1011.  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.  Section 4 of a chapter of the laws of 2025 amending the general
 business law relating to consumer litigation  funding,  as  proposed  in
 legislative  bills numbers S. 1104-A and A. 804-C, is amended to read as
 follows:
   § 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 previous-
 ly  effectuated prior to the effective date of this act. EFFECTIVE IMME-
 DIATELY, THE ADDITION, AMENDMENT AND/OR REPEAL OF ANY RULE OR REGULATION
 NECESSARY FOR THE IMPLEMENTATION OF THIS ACT ON ITS EFFECTIVE  DATE  ARE
 AUTHORIZED TO BE MADE AND COMPLETED ON OR BEFORE SUCH DATE.
   §  5.  This  act  shall  take  effect  immediately; provided, however,
 sections one, two, and three of this act shall take effect on  the  same
 date  and  in  the same manner as a chapter of the laws of 2025 amending
 the general business law relating to  consumer  litigation  funding,  as
 proposed  in  legislative  bills  numbers  S. 1104-A and A. 804-C, takes
 effect; provided further, however, sections 1009 and 1010 of the  finan-
 cial  services  law added by section three of this act shall take effect
 one year after they shall have become a law.