Florida Senate - 2020 COMMITTEE AMENDMENT Bill No. SB 1828 Ì327102hÎ327102 LEGISLATIVE ACTION Senate . House Comm: UNFAV . 02/19/2020 . . . . ————————————————————————————————————————————————————————————————— ————————————————————————————————————————————————————————————————— The Committee on Banking and Insurance (Thurston) recommended the following: 1 Senate Substitute for Amendment (793752) (with title 2 amendment) 3 4 Delete everything after the enacting clause 5 and insert: 6 Section 1. Part XIII of chapter 559, Florida Statutes, 7 consisting of sections 559.952, 559.953, 559.954, 559.955, 8 559.956, 559.959, and 559.961, is created and may be cited as 9 the “Litigation Financing Consumer Protection Act.” 10 Section 2. Section 559.952, Florida Statutes, is created to 11 read: 12 559.952 Definitions.—As used in this part, the term: 13 (1) “Consumer” means any individual residing, physically 14 present, or domiciled in this state. 15 (2) “Funded amount” means the funds actually received by, 16 or on behalf of, a consumer under a litigation financing 17 contract. 18 (3) “Health care practitioner” has the same meaning as in 19 s. 456.001. 20 (4) “Interest” means the cost of obtaining litigation 21 financing and includes any profit or advantage of any kind 22 whatsoever that a litigation financier may charge, contract for, 23 collect, receive, or in any way obtain as a condition of a 24 litigation financing contract. Charges and fees specifically 25 authorized by this part may not be deemed interest. 26 (5) “Litigation financier” means a person engaged in the 27 business of litigation financing. 28 (6) “Litigation financing” means a nonrecourse transaction 29 in which a litigation financier provides funds to a consumer in 30 exchange for an assignment of the consumer’s contingent right to 31 receive an amount of the potential proceeds of his or her civil 32 action or claim. The term does not include any of the following: 33 (a) Legal services provided to a consumer on a contingency 34 fee basis or advanced legal costs, when such services or costs 35 are provided by an attorney representing the consumer in 36 accordance with the Florida Rules of Professional Conduct. 37 (b) A commercial tort claim as defined in s. 38 679.1021(1)(m). 39 (c) Lending or financing arrangements between an attorney 40 or a law firm and a lending institution to fund litigation 41 costs. 42 (d) A consumer finance loan as defined in s. 516.01. 43 (7) “Net proceeds” means the portion of the proceeds of a 44 civil action or claim remaining after satisfaction of all liens 45 with a higher priority than that of the litigation financier as 46 specified in s. 559.955(2). 47 Section 3. Section 559.953, Florida Statutes, is created to 48 read: 49 559.953 Litigation financing contracts; terms.—The terms of 50 a litigation financing contract must be set forth in a written 51 contract that is completely filled in with no incomplete 52 sections when the contract is presented to the consumer. The 53 contract must contain all of the following: 54 (1) A right of rescission allowing the consumer to cancel 55 the contract without penalty, interest, charges, fees, or 56 further obligation if, within 5 business days after contract 57 execution or funds receipt by the consumer, whichever is later, 58 the consumer provides written rescission notice and returns any 59 funds already provided under the contract to the litigation 60 financier. 61 (2) The consumer’s written acknowledgment of whether an 62 attorney represents him or her in the civil action or claim that 63 is the subject of the contract. 64 (3) A statement indicating that, in the event the proceeds 65 of the subject civil action or claim are paid into a settlement 66 fund or trust, the litigation financier must notify the fund or 67 trust administrator of any outstanding financial obligations 68 arising from the contract. 69 (4) The consumer’s initials on each page of the contract 70 and the signature of the consumer on the executed contract. 71 Section 4. Section 559.954, Florida Statutes, is created to 72 read: 73 559.954 Prohibited acts.—A litigation financier may not: 74 (1) Pay or offer to pay a commission, a referral fee, or 75 other consideration to any person, including an attorney, a law 76 firm, or a health care practitioner, for referring a consumer to 77 a litigation financier. 78 (2) Accept a commission, a referral fee, a rebate, or other 79 consideration from any person, including an attorney, a law 80 firm, or a health care practitioner. 81 (3) Advertise false or misleading information about its 82 products or services. 83 (4) Refer a consumer to a specific attorney, law firm, or 84 health care practitioner, except that, if a consumer lacks legal 85 representation, the litigation financier may refer the consumer 86 to an attorney referral service operated by a county or state 87 bar association. 88 (5) Fail to supply a copy of an executed litigation 89 financing contract to the consumer upon execution of a contract. 90 (6) Attempt to obtain a waiver of any remedy, including, 91 but not limited to, compensatory, statutory, or punitive 92 damages, which the consumer might otherwise have in the subject 93 civil action or claim. 94 (7) Attempt to effect arbitration or waiver of a consumer’s 95 right to a jury trial in the subject civil action or claim. 96 (8) Offer or provide legal advice to the consumer regarding 97 the litigation financing contract or the subject civil action or 98 claim. 99 (9) Report to a consumer credit reporting agency if 100 insufficient funds remain from the net proceeds of the subject 101 civil action or claim to repay the litigation financier. 102 (10) Direct, or make any decisions with respect to, the 103 conduct of the subject civil action or claim or any settlement 104 thereof. 105 (11) Enter into a litigation financing contract with a 106 consumer incorporating the consumer’s obligations to the 107 litigation financier under an existing litigation financing 108 contract. 109 (12) Knowingly enter into a litigation financing contract 110 with a consumer already under a litigation financing contract 111 with another litigation financier without first paying the 112 entire funded amount and all charges owed under the existing 113 contract, unless the consumer consents to a contemporaneous 114 financing arrangement in writing. 115 (13) Provide litigation financing for a claim under chapter 116 440. 117 Section 5. Section 559.955, Florida Statutes, is created to 118 read: 119 559.955 Required disclosures.— 120 (1) A litigation financing contract must contain all of the 121 following disclosures on the front page of the contract in at 122 least 12-point boldfaced type: 123 (a) Notice of the consumer’s right to a copy of the fully 124 executed contract upon execution of the contract. 125 (b) A statement that the litigation financier has no right 126 to and will not make any decisions or attempt to influence the 127 consumer or his or her attorney about the conduct of the civil 128 action or claim subject to the contract and that the right to 129 make such decisions remains solely with the consumer. 130 (c) The total funded amount provided to the consumer. 131 (d) An itemized list of all charges and fees payable by the 132 consumer. 133 (e) The interest rate. 134 (f) The total amount due from the consumer in 6-month 135 intervals for 3 years, including all charges, fees, and 136 interest. 137 (g) A statement that the consumer will owe no charges, 138 fees, or interest other than those described in the disclosures. 139 (h) The cumulative amount due from the consumer for all 140 litigation financing contracts if the consumer seeks multiple 141 contracts and makes repayment any time after contract execution. 142 (i) Notice that if the consumer recovers nothing from the 143 subject civil action or claim, he or she will owe the litigation 144 financier nothing. 145 (j) Notice that if the net proceeds of the subject civil 146 action or claim are insufficient to fully repay the litigation 147 financier, the litigation financier will accept a reduced sum as 148 full payment of the funded amount and all charges, fees, and 149 interest owed, which sum may not exceed the net proceeds less 150 proceeds specifically awarded for future medical expenses. 151 (2) A litigation financing contract must also contain the 152 following disclosure on the front page of the contract in at 153 least 18-point uppercase and boldfaced type: 154 155 CONSUMER’S RIGHT TO CANCELLATION: YOU MAY CANCEL THIS 156 CONTRACT WITHOUT PENALTY, INTEREST, CHARGES, FEES, OR FURTHER 157 OBLIGATION WITHIN 5 BUSINESS DAYS FROM THE DATE OF CONTRACT 158 EXECUTION OR RECEIVING FUNDS FROM [INSERT NAME OF THE LITIGATION 159 FINANCIER], WHICHEVER IS LATER, BY GIVING WRITTEN NOTICE OF THE 160 CANCELLATION AND BY RETURNING THE FUNDS TO [INSERT NAME OF THE 161 LITIGATION FINANCIER]. FOR PURPOSES OF THE DEADLINE, THE 162 POSTMARK DATE ON FUNDS RETURNED BY REGULAR U.S. MAIL, OR THE 163 DATE OF THE RETURN RECEIPT REQUESTED IF MAILED BY CERTIFIED 164 MAIL, WILL BE CONSIDERED THE DATE OF RETURN OF THE FUNDS. 165 166 (3) A litigation financing contract must contain the 167 following disclosure immediately above the consumer’s signature 168 line in 18-point uppercase and boldfaced type: 169 170 DO NOT SIGN THIS CONTRACT BEFORE READING IT COMPLETELY OR 171 IF THE CONTRACT CONTAINS ANY INCOMPLETE OR BLANK SECTIONS. 172 BEFORE YOU SIGN THIS CONTRACT, YOU SHOULD CONSULT AN ATTORNEY. 173 YOU MAY ALSO WANT TO CONSULT A TAX ADVISOR, A FINANCIAL ADVISOR, 174 OR AN ACCOUNTANT. 175 Section 6. Section 559.956, Florida Statutes, is created to 176 read: 177 559.956 Contingent right to proceeds assignable; priority 178 of lien or right to proceeds.— 179 (1) A consumer may assign his or her contingent right to an 180 amount of the potential proceeds of a civil action or claim. 181 (2) A litigation financier’s lien on the potential proceeds 182 of a civil action or claim has priority over liens that attach 183 to such proceeds subsequent to the attachment of the litigation 184 financier’s lien, except for any of the following: 185 (a) Attorney, insurer, or health care practitioner liens or 186 liens based upon subrogation interests or reimbursement rights 187 related to the subject civil action or claim. 188 (b) Child support, Medicare, tax, or any other statutory or 189 governmental lien. 190 Section 7. Section 559.959, Florida Statutes, is created to 191 read: 192 559.959 Effect of communication on privilege. 193 Communications between a consumer’s attorney and a litigation 194 financier as it pertains to a litigation financing contract do 195 not limit, waive, or abrogate the scope or nature of any 196 statutory or common-law privilege, including the work-product 197 doctrine and the attorney-client privilege. 198 Section 8. Section 559.961, Florida Statutes, is created to 199 read: 200 559.961 Violation; enforcement.— 201 (1) A violation of this part is an unfair or deceptive 202 trade act or practice under part II of chapter 501. 203 (2) A litigation financing transaction that does not comply 204 with the provisions of this part is void and unenforceable, and 205 the litigation financier has no right to collect, receive, or 206 retain any principal, interest, or charges relating to such 207 transaction. 208 Section 9. This act shall take effect July 1, 2020. 209 210 ================= T I T L E A M E N D M E N T ================ 211 And the title is amended as follows: 212 Delete everything before the enacting clause 213 and insert: 214 A bill to be entitled 215 An act relating to litigation financing consumer 216 protection; creating the Litigation Financing Consumer 217 Protection Act; creating s. 559.952, F.S.; defining 218 terms; creating s. 559.953, F.S.; specifying mandatory 219 litigation financing contract terms; creating s. 220 559.954, F.S.; prohibiting litigation financiers from 221 engaging in specified conduct; creating s. 559.955, 222 F.S.; requiring specified mandatory litigation 223 financing contract disclosures; creating s. 559.956, 224 F.S.; authorizing a consumer to assign his or her 225 contingent right to proceeds from a civil action or 226 claim; establishing the priority of liens against or 227 rights to civil action or claim proceeds; creating s. 228 559.959 , F.S.; providing that specified 229 communications between attorneys and litigation 230 financiers do not limit or waive statutory or common 231 law privilege; creating s. 559.961, F.S.; providing 232 that a violation of this part is a violation of the 233 Florida Deceptive and Unfair Trade Practices Act; 234 providing that a contract that does not comply with 235 the provisions of this part is void and unenforceable; 236 providing an effective date.