SENATE BILL No. 97 DIGEST OF INTRODUCED BILL

Transcription

1 Intrduced Versin SENATE BILL N. 97 DIGEST OF INTRODUED BILL itatins Affected: I Snsis: Funding f lawsuits. Establishes a rcedure b which a cman ma rvide a lan t the laintiff in an actin in exchange fr the cntingent right t receive a art f the tential rceeds f the actin. Prvides that a vilatin f the cnditins under which a lan ma be ffered t a laintiff cnstitutes a decetive act subject t enfrcement b the attrne general. Effective: Jul 1, Head Januar 5, 2011, read first time and referred t mmittee n Judiciar.

2 Intrduced First Regular Sessin 117th General Assembl (2011) PRINTING ODE. Amendments: Whenever an existing statute (r a sectin f the Indiana nstitutin) is being amended, the text f the existing rvisin will aear in this stle te, additins will aear in this stle te, and deletins will aear in this stle te. Additins: Whenever a new statutr rvisin is being enacted (r a new cnstitutinal rvisin adted), the text f the new rvisin will aear in this stle te. Als, the wrd NEW will aear in that stle te in the intrductr clause f each SETION that adds a new rvisin t the Indiana de r the Indiana nstitutin. nflict recnciliatin: Text in a statute in this stle te r this stle te recnciles cnflicts between statutes enacted b the 2010 Regular Sessin f the General Assembl. SENATE BILL N. 97 A BILL FOR AN AT t amend the Indiana de cncerning cmmercial law. Be it enacted b the General Assembl f the State f Indiana: 1 SETION 1. I IS ADDED TO THE INDIANA ODE AS 2 A NEW ARTILE TO READ AS FOLLOWS [EFFETIVE JULY 1, ]: 4 ARTILE 10. ONSUMER LEGAL FUNDING 5 hater 1. Definitins 6 Sec. 1. As used in this article, "cnsumer" means a natural 7 ersn wh: 8 (1) resides in Indiana; r 9 (2) elects t enter int a cnsumer legal funding transactin in 10 Indiana. 11 Sec. 2. As used in this article, "cnsumer legal funding" means 12 the funding rvided t a cnsumer b a cnsumer legal funding 13 cman in a cnsumer legal funding transactin. 14 Sec. 3. (a) As used in this article, "cnsumer legal funding 15 cman" means a ersn r entit that enters int a cnsumer 16 legal funding transactin with a cnsumer. 17 (b) The term includes the fllwing:

3 2 1 (1) An affiliate r subsidiar f a cnsumer legal funding 2 cman. 3 (2) An entit r ersn wh bus a whle r artial interest in 4 a cnsumer legal funding cman. 5 (3) A ersn wh acts as an agent t rvide cnsumer legal 6 funding frm a third art fr a fee. 7 (4) A ersn wh acts as an agent fr a third art in 8 rviding cnsumer legal funding fr a fee, regardless f 9 whether arval r accetance b the third art is 10 necessar t create a legal bligatin fr the third art. 11 (5) An ther ersn r entit that is determined b the 12 attrne general t be engaged in a transactin that is in 13 substance: 14 (A) disguised cnsumer legal funding; r 15 (B) a subterfuge fr the urse f aviding this chater. 16 (c) The term des nt include the fllwing: 17 (1) A bank, lender, financing entit, r ther secial urse 18 entit: 19 (A) that rvides financing t a cnsumer legal funding 20 cman; r 21 (B) t which a cnsumer legal funding cman grants a 22 securit interest r transfers an rights r interest in 23 cnsumer legal funding. 24 (2) An attrne r accuntant wh rvides services t a 25 cnsumer. 26 Sec. 4. As used in this article, "cnsumer legal funding cntract" 27 means a cntract rviding fr a cnsumer legal funding 28 transactin. 29 Sec. 5. As used in this article, "cnsumer legal funding 30 transactin" means a transactin in which: 31 (1) a cnsumer legal funding cman rvides cnsumer 32 legal funding t a cnsumer; and 33 (2) the cnsumer assigns t the cnsumer legal funding 34 cman the cntingent right t receive a art f the 35 settlement, insurance ament, r award f damages btained 36 in the cnsumer's legal actin. 37 Sec. 6. As used in this article, "funding amunt" means the 38 dllar amunt f cnsumer legal funding rvided t the cnsumer 39 b the cnsumer legal funding cman in a cnsumer legal 40 funding transactin. 41 Sec. 7. As used in this article, "funding date" means the date n 42 which a cnsumer legal funding cman rvides the funding

4 3 1 amunt t the cnsumer. 2 Sec. 8. (a) As used in this article, "legal actin" means: 3 (1) a bna fide civil actin in which damages ma be awarded; 4 r 5 (2) a cause f actin un which a civil actin described in 6 subdivisin (1) ma be based. 7 (b) The term includes: 8 (1) an settlement r negtiatins tward settlement f a civil 9 actin described in subsectin (a)(1); r 10 (2) an agreement r negtiatins tward an agreement under 11 which a civil actin based un a cause f actin described in 12 subsectin (a)(2) wuld nt be initiated. 13 Sec. 9. As used in this article, "rceeds" means the funds frm 14 a settlement, insurance ament, r award f damages btained in 15 the cnsumer's legal actin frm which a ament t the cnsumer 16 legal funding cman ma be made after reductins are made in 17 accrdance with this chater. 18 Sec. 10. As used in this article, "reslutin date" means the date 19 f receit f: 20 (1) the reament f the funding amunt; and 21 (2) the ament f agreed un fees cnnected with the 22 cnsumer's legal actin; 23 b the cnsumer legal funding cman. 24 hater 2. nsumer Legal Funding 25 Sec. 1. (a) A ersn ma nt enter int a cnsumer legal funding 26 transactin with a cnsumer with resect t a articular legal 27 actin unless the cnsumer is reresented b an attrne with 28 resect t that legal actin at the time the cnsumer enters int the 29 cnsumer legal funding transactin. 30 (b) A cnsumer legal funding cntract entered int in vilatin 31 f subsectin (a) is vid. 32 Sec. 2. A cnsumer legal funding cntract must be in writing 33 and must cml with the fllwing requirements: 34 (1) The cntract must cntain n the frnt age, each with a 35 searate heading and in at least 12 int bld te, the 36 fllwing disclsures: 37 (A) The ttal funding amunt aid t the cnsumer. 38 (B) An itemizatin f ne (1) time fees. 39 () The ttal dllar amunt f the rceeds assigned b the 40 cnsumer t the cnsumer legal funding cman, set frth 41 in ne hundred eight (180) da intervals fr ne thusand 42 eight (1,080) das beginning ne hundred eight (180)

5 4 1 das after the funding date. 2 (D) A calculatin f the annual ercentage fee fr each ne 3 hundred eight (180) da interval. 4 (2) The cntract must rvide that the cnsumer ma cancel 5 the cntract nt later than five (5) business das fllwing the 6 cnsumer's receit f the funding amunt, withut enalt r 7 further bligatin. The cntract must cntain the fllwing 8 ntice written in at least 12 int bld te: "nsumer's 9 right t cancellatin: Yu ma cancel this cntract withut 10 enalt r further bligatin within 5 business das after the 11 funding date.". 12 (3) The cntract must secif that in rder fr the 13 cancellatin described in subdivisin (2) t be effective the 14 cnsumer must return t the cnsumer legal funding cman 15 the ttal amunt f the funding amunt b: 16 (A) delivering the cnsumer legal funding cman's 17 uncashed check t the cman's ffices in ersn nt later 18 than five (5) business das after receit f the funding 19 amunt; 20 (B) sending a ntice f cancellatin via registered r 21 certified mail and including in the mailing a return f the 22 ttal amunt f the funding amunt in the frm f the 23 cnsumer legal funding cman's uncashed check nt 24 later than five (5) business das after receit f the funding 25 amunt; r 26 () sending a registered, certified, r cashier's check r 27 mne rder b insured, registered, r certified United 28 States mail, stmarked nt later than five (5) business 29 das after receit f the funding amunt, t the address 30 secified in the cntract fr cancellatin. 31 (4) The cntract must cntain the fllwing statements in at 32 least 12 int bld te: 33 (A) "(Insert name f the cnsumer legal funding cman) 34 agrees that it has n right t and will nt make an 35 decisins with resect t the cnduct f the legal actin r 36 an settlement r reslutin f the legal actin, and that 37 the right t make thse decisins remains slel with u 38 and ur attrne in the legal actin. (Insert name f the 39 cnsumer legal funding cman) further agrees that it 40 has n right t ursue the legal actin n ur behalf.". 41 (B) "(Insert name f the cnsumer legal funding cman) 42 agrees that it ma accet nl an assignment f a

6 5 1 cntingent right t receive a rtin f the tential 2 rceeds (rather than an assignment f ur legal actin) 3 and the cntracted return f the funding amunt. (Insert 4 name f the cnsumer legal funding cman) further 5 agrees that an agreed un fees assigned t (insert name 6 f the cnsumer legal funding cman) ma nt be 7 determined as a ercentage f ur recver frm the legal 8 actin but must be fixed as a cntractuall determined 9 amunt based un the interval f time frm the funding 10 date thrugh the reslutin date.". 11 (5) All cntracts with the cnsumer must cntain the fllwing 12 statement, in lain language in a bx with 15 int bld te, 13 in all caital letters, stating the fllwing: 14 "THE FUNDING AMOUNT AND AGREED UPON FEES 15 SHALL BE PAID ONLY FROM THE PROEEDS OF 16 YOUR LEGAL ATION, AND SHALL BE PAID ONLY TO 17 THE EXTENT THAT THERE ARE AVAILABLE 18 PROEEDS FROM YOUR LEGAL ATION. YOU WILL 19 NOT OWE (INSERT NAME OF THE ONSUMER LEGAL 20 FUNDING OMPANY) ANYTHING IF THERE ARE NO 21 PROEEDS FROM YOUR LEGAL ATION.". 22 (6) The cntract must cntain the fllwing statement in at 23 least 12 int bld te lcated immediatel abve the sace 24 where the cnsumer's signature is required: 25 "D nt sign this agreement befre u read it cmletel r 26 if it cntains an blank saces. Yu are entitled t a 27 cmletel filled in c f this agreement. Befre u sign 28 this agreement, u shuld btain the advice f an attrne. 29 Deending n the circumstances, u ma want t cnsult a 30 tax, ublic, r rivate benefit lanning r financial 31 rfessinal. Yu acknwledge that ur attrne in the legal 32 actin has rvided n tax, ublic, r rivate benefit lanning 33 regarding this transactin. Yu further understand and agree 34 that the funds u receive frm (insert name f the cnsumer 35 legal funding cman) ma nt be used t a fr r be 36 alied t the ament f attrne's fees r litigatin csts 37 related t ur legal actin.". 38 (7) The executed cntract must cntain a written 39 acknwledgment b the cnsumer that the cnsumer has 40 reviewed the cntract in its entiret. 41 (8) The cnsumer legal funding cman shall rvide the 42 cnsumer's attrne with a written ntificatin f the

7 6 1 cnsumer legal funding rvided t the cnsumer within three 2 (3) business das f the funding date b wa f United States 3 mail, curier service, facsimile, r ther means f service 4 evidencing rf f deliver, unless there is a written 5 acknwledgment b the attrne reresenting the cnsumer 6 in the legal actin as t the terms f the cntract. 7 (9) The cntracted return f the funding amunt, lus an 8 agreed un fees assigned t the cnsumer legal funding 9 cman n the reslutin date, ma nt be determined as a 10 ercentage f the recver frm the legal actin but must be 11 fixed as a cntractuall determined amunt based un 12 intervals f time frm the funding date thrugh the reslutin 13 date. 14 Sec. 3. An attrne's fee, Medicare r Medicaid liens, and 15 statutr health care rvider liens arising frm the cnsumer's 16 underling legal actin take ririt ver an claim f the 17 cnsumer legal funding cman. All ther liens r securit 18 interests take ririt b nrmal eratin f law. 19 Sec. 4. Each cnsumer legal funding cman shall adhere t 20 the fllwing: 21 (1) The cnsumer legal funding cman ma nt a r ffer 22 t a an cmensatin t an attrne, law firm, medical 23 rvider, chirractr, hsical theraist, r an f their 24 emlees fr referring a cnsumer t the cnsumer legal 25 funding cman. The cnsumer legal funding cman 26 agrees nt t accet an cmensatin frm an attrne, law 27 firm, medical rvider, chirractr, hsical theraist, r 28 an f their emlees, ther than the funding amunt and 29 an agreed un fees the cnsumer assigned t the cnsumer 30 legal funding cman ut f the tential rceeds f the 31 legal actin. 32 (2) The cnsumer legal funding cman ma nt advertise 33 false r intentinall misleading infrmatin regarding its 34 rduct r services. 35 (3) The cnsumer legal funding cman ma nt knwingl 36 rvide funding t a cnsumer wh has reviusl sld and 37 assigned an amunt f the tential rceeds f the 38 cnsumer's legal actin t anther cnsumer legal funding 39 cman withut first urchasing that cnsumer legal 40 funding cman's entire accrued balance, unless therwise 41 agreed t in writing b the cnsumer and all cnsumer legal 42 funding cmanies that rvided the cnsumer legal funding

8 7 1 t the cnsumer. 2 (4) The cnsumer legal funding cman ma nt ffer single 3 remium credit life, disabilit, r unemlment insurance 4 that will be financed thrugh a cnsumer legal funding 5 transactin. 6 (5) Fr a nn-english seaking cnsumer, un the written 7 request f the cnsumer r the cnsumer's attrne: 8 (A) the terms f the cntract required b this chater must 9 be translated in writing int the cnsumer's rimar 10 language; 11 (B) the cnsumer must sign the translated dcument 12 cntaining the translated terms and initial each age; and 13 () the translatr r attrne must sign an affirmatin 14 cnfirming that the translated terms have been resented 15 t the cnsumer in the cnsumer's rimar language and 16 acknwledged b the cnsumer. 17 (6) The cnsumer legal funding cman ma nt knwingl 18 enter int a cnsumer legal funding cntract with a cnsumer 19 if the cnsumer's legal actin is a ending class actin lawsuit 20 at the time f the funding. If an legal actin in which a 21 cnsumer has received cnsumer legal funding is certified as 22 a class actin, the cnsumer legal funding cman ma 23 rvide n further funding. 24 (7) An attrne r law firm ma nt have a financial interest 25 in the cnsumer legal funding cman rviding cnsumer 26 legal funding t a cnsumer reresented b that attrne r 27 law firm. 28 (8) N cmmunicatin between a cnsumer's attrne and a 29 cnsumer legal funding cman relating t a cnsumer's 30 cnsumer legal funding transactin ma limit, waive, r 31 abrgate an statutr r cmmn law rivilege, including 32 the attrne client rivilege r the wrk rduct dctrine. 33 (9) The return f the funding amunt t the cnsumer legal 34 funding cman, lus an agreed un fees, ma be 35 rendered nl ut f the rceeds, if an, f the realized 36 settlement, insurance ament, r award f damages the 37 cnsumer ma receive in the cnsumer's legal actin. The 38 cnsumer ma nt assign an art f the tential rceeds 39 which, under the cntingent fee agreement between the 40 cnsumer and the cnsumer's attrne, will be remitted t the 41 cnsumer's attrne as attrne's fees r reimbursement fr 42 csts incurred b the cnsumer's attrne in cnnectin with

9 8 1 the legal actin. 2 (10) If the rceeds f the legal actin are insufficient t 3 return the full funding amunt lus the agreed un fees t 4 the cnsumer legal funding cman frm the rceeds f the 5 legal actin, the cnsumer legal funding cman is entitled 6 t be aid nl that art f the full amunt f the funding 7 amunt lus the agreed un fees that can be aid frm the 8 settlement, insurance ament, r award f damages. 9 Hwever, this subdivisin des nt al if the cnsumer is 10 fund t have cmmitted fraud against the cnsumer legal 11 funding cman. 12 (11) The cnsumer legal funding cman has n authrit t 13 make an decisin with resect t the cnduct f the litigatin 14 f the legal actin r an settlement r reslutin f the 15 actin. The right t make thse decisins remains slel with 16 the cnsumer and the cnsumer's attrne reresenting the 17 cnsumer in the legal actin. The cnsumer legal funding 18 cman has n right t ursue the legal actin n the 19 cnsumer's behalf. 20 (12) The cnsumer legal funding cman ma accet nl an 21 assignment f a cntingent right t receive a art f the 22 tential rceeds, rather than an assignment f the legal 23 actin. The cntracted return f the funding amunt, lus an 24 agreed un fees assigned t the cnsumer legal funding 25 cman, ma nt be determined as a ercentage f the ttal 26 recver frm the legal actin, but must be fixed as a 27 cntractuall determined amunt based un intervals f 28 time frm the funding date thrugh the reslutin date. 29 (13) The cntact between the cnsumer legal funding 30 cman and the cnsumer is subject t the fllwing 31 limitatins: 32 (A) The cnsumer legal funding cman ma nt cntact 33 the cnsumer after the funding date in rder t influence 34 an decisins with resect t the cnduct f the legal actin 35 r an settlement r reslutin f the legal actin. 36 Hwever, the cnsumer legal funding cman ma 37 cntact the cnsumer r the cnsumer's attrne t btain 38 the status f the legal actin and ma cntact the cnsumer 39 after the funding date t btain udated attrne cntact 40 infrmatin. 41 (B) After the reslutin date, a cnsumer legal funding 42 cman ma nt seek t cllect additinal funds r

10 9 1 threaten civil actin fr an deficienc. 2 Sec. 5. A cnsumer legal funding transactin that cmlies with 3 this chater is nt: 4 (1) an investment cntract; r 5 (2) subject t an ther statutr r regulatr rvisins 6 gverning lans r investment cntracts. 7 Sec. 6. T the extent that this chater cnflicts with an ther 8 law, this chater suersedes the ther law fr the urses f 9 regulating cnsumer legal funding in Indiana. 10 Sec. 7. (a) A vilatin f this chater is a decetive act that is 11 actinable b the attrne general. 12 (b) The attrne general ma bring an actin under this article 13 t btain an r all f the fllwing: 14 (1) An injunctin t enjin future vilatins f this chater. 15 (2) A civil enalt f nt mre than ten thusand dllars 16 ($10,000) er decetive act. 17 (3) The attrne general's reasnable csts in: 18 (A) the investigatin f the decetive act; and 19 (B) maintaining the actin.