Florida Senate - 2020                        COMMITTEE AMENDMENT
       Bill No. SB 1828
       
       
       
       
       
       
                                Ì7937528Î793752                         
       
                              LEGISLATIVE ACTION                        
                    Senate             .             House              
                  Comm: PEND           .                                
                  02/19/2020           .                                
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       The Committee on Banking and Insurance (Broxson) recommended the
       following:
       
    1         Senate Amendment (with title amendment)
    2  
    3         Delete everything after the enacting clause
    4  and insert:
    5         Section 1. Part XIII of chapter 559, Florida Statutes,
    6  consisting of sections 559.952, 559.953, 559.954, 559.955,
    7  559.956, 559.957, 559.958, 559.959, and 559.961, is created and
    8  may be cited as the “Litigation Financing Consumer Protection
    9  Act.”
   10         Section 2. Section 559.952, Florida Statutes, is created to
   11  read:
   12         559.952Definitions.—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         559.953Litigation 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         559.954Prohibited 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)Assign a litigation financing contract in whole or in
  100  part.
  101         (10)Report to a consumer credit reporting agency if
  102  insufficient funds remain from the net proceeds of the subject
  103  civil action or claim to repay the litigation financier.
  104         (11)Direct, or make any decisions with respect to, the
  105  conduct of the subject civil action or claim or any settlement
  106  thereof.
  107         (12)Enter into a litigation financing contract with a
  108  consumer incorporating the consumer’s obligations to the
  109  litigation financier under an existing litigation financing
  110  contract.
  111         (13)Knowingly enter into a litigation financing contract
  112  with a consumer already under a litigation financing contract
  113  with another litigation financier without first paying the
  114  entire funded amount and all charges owed under the existing
  115  contract, unless the consumer consents to a contemporaneous
  116  financing arrangement in writing.
  117         (14)Provide litigation financing for a claim under chapter
  118  440.
  119         Section 5. Section 559.955, Florida Statutes, is created to
  120  read:
  121         559.955Required disclosures.—
  122         (1)A litigation financing contract must contain all of the
  123  following disclosures on the front page of the contract in at
  124  least 12-point boldfaced type:
  125         (a)Notice of the consumer’s right to a copy of the fully
  126  executed contract upon execution of the contract.
  127         (b)A statement that the litigation financier has no right
  128  to and will not make any decisions or attempt to influence the
  129  consumer or his or her attorney about the conduct of the civil
  130  action or claim subject to the contract and that the right to
  131  make such decisions remains solely with the consumer.
  132         (c)The total funded amount provided to the consumer.
  133         (d)An itemized list of all charges and fees payable by the
  134  consumer.
  135         (e)The interest rate.
  136         (f)The total amount due from the consumer in 6-month
  137  intervals for 3 years, including all charges, fees, and
  138  interest.
  139         (g)A statement that the consumer will owe no charges,
  140  fees, or interest other than those described in the disclosures.
  141         (h)The cumulative amount due from the consumer for all
  142  litigation financing contracts if the consumer seeks multiple
  143  contracts and makes repayment any time after contract execution.
  144         (i)Notice that if the consumer recovers nothing from the
  145  subject civil action or claim, he or she will owe the litigation
  146  financier nothing.
  147         (j)Notice that if the net proceeds of the subject civil
  148  action or claim are insufficient to fully repay the litigation
  149  financier, the litigation financier will accept a reduced sum as
  150  full payment of the funded amount and all charges, fees, and
  151  interest owed, which sum may not exceed the net proceeds less
  152  proceeds specifically awarded for future medical expenses.
  153         (2)A litigation financing contract must also contain the
  154  following disclosure on the front page of the contract in at
  155  least 18-point uppercase and boldfaced type:
  156  
  157         CONSUMER’S RIGHT TO CANCELLATION: YOU MAY CANCEL THIS
  158  CONTRACT WITHOUT PENALTY, INTEREST, CHARGES, FEES, OR FURTHER
  159  OBLIGATION WITHIN 5 BUSINESS DAYS FROM THE DATE OF CONTRACT
  160  EXECUTION OR RECEIVING FUNDS FROM [INSERT NAME OF THE LITIGATION
  161  FINANCIER], WHICHEVER IS LATER, BY GIVING WRITTEN NOTICE OF THE
  162  CANCELLATION AND BY RETURNING THE FUNDS TO [INSERT NAME OF THE
  163  LITIGATION FINANCIER]. FOR PURPOSES OF THE DEADLINE, THE
  164  POSTMARK DATE ON FUNDS RETURNED BY REGULAR U.S. MAIL, OR THE
  165  DATE OF THE RETURN RECEIPT REQUESTED IF MAILED BY CERTIFIED
  166  MAIL, WILL BE CONSIDERED THE DATE OF RETURN OF THE FUNDS.
  167  
  168         (3)A litigation financing contract must contain the
  169  following disclosure immediately above the consumer’s signature
  170  line in 18-point uppercase and boldfaced type:
  171  
  172         DO NOT SIGN THIS CONTRACT BEFORE READING IT COMPLETELY OR
  173  IF THE CONTRACT CONTAINS ANY INCOMPLETE OR BLANK SECTIONS.
  174  BEFORE YOU SIGN THIS CONTRACT, YOU SHOULD CONSULT AN ATTORNEY.
  175  YOU MAY ALSO WANT TO CONSULT A TAX ADVISOR, A FINANCIAL ADVISOR,
  176  OR AN ACCOUNTANT.
  177         Section 6. Section 559.956, Florida Statutes, is created to
  178  read:
  179         559.956Contingent right to proceeds assignable; priority
  180  of lien or right to proceeds.—
  181         (1)A consumer may assign his or her contingent right to
  182  receive an amount of the potential proceeds of a civil action or
  183  claim.
  184         (2)A litigation financier’s lien on the potential proceeds
  185  of a civil action or claim has priority over liens that attach
  186  to such proceeds subsequent to the attachment of the litigation
  187  financier’s lien, except for any of the following:
  188         (a)Attorney, insurer, or health care practitioner liens or
  189  liens based upon subrogation interests or reimbursement rights
  190  related to the subject civil action or claim.
  191         (b)Child support, Medicare, tax, or any other statutory or
  192  governmental lien.
  193         Section 7. Section 559.957, Florida Statutes, is created to
  194  read:
  195         559.957Interest, fees, charges, and penalties.—
  196         (1)A litigation financier may not directly or indirectly
  197  charge, contract for, or receive an interest rate of greater
  198  than 30 percent of the funded amount per annum. In determining
  199  compliance with the statutory maximum interest rate, the
  200  computations used must be simple interest and not add-on
  201  interest or any other computation.
  202         (2)The maximum interest rate that may be contracted for
  203  and received by a litigation financier is 12 times the maximum
  204  monthly rate, and the maximum monthly rate must be computed on
  205  the basis of one-twelfth of the annual rate for each full month.
  206  The maximum daily rate must be computed on the basis of the
  207  maximum monthly rate divided by the number of days in the month.
  208         (3)Interest may only accrue until a court enters a final
  209  order or a settlement agreement is executed in the civil action
  210  or claim subject to the litigation financing contract, whichever
  211  is earlier, but in no case may interest accrue for a period
  212  exceeding 3 years from the date the consumer receives the funds
  213  from the litigation financier. The total interest amount
  214  assessed must be calculated based on the actual number of days
  215  for which interest accrued.
  216         (4)A litigation financier may not directly or indirectly
  217  charge, contract for, or receive any charges or fees the
  218  combined total of which exceeds $500 with regard to a single
  219  civil action or claim, regardless of the number of litigation
  220  financing contracts the consumer enters into with the litigation
  221  financier respecting the civil action or claim.
  222         (5)A litigation financier may not directly or indirectly
  223  charge, contract for, or receive any interest, charges, or fees
  224  for rescission or cancellation of a litigation financing
  225  contract under s. 559.953(1).
  226         Section 8. Section 559.958, Florida Statutes, is created to
  227  read:
  228         559.958Litigation financing contracts; discovery.—Except
  229  as otherwise ordered by the court, a party to any civil action
  230  or claim, without awaiting a discovery request, shall provide to
  231  the other parties any contract under which a litigation
  232  financier has a contingent right to receive compensation sourced
  233  from potential proceeds of the civil action or claim.
  234         Section 9. Section 559.959, Florida Statutes, is created to
  235  read:
  236         559.959Effect of communication on privilege.
  237  Communications between a consumer’s attorney and a litigation
  238  financier as it pertains to a litigation financing contract do
  239  not limit, waive, or abrogate the scope or nature of any
  240  statutory or common-law privilege, including the work-product
  241  doctrine and the attorney-client privilege.
  242         Section 10. Section 559.961, Florida Statutes, is created
  243  to read:
  244         559.961Violation; enforcement.—
  245         (1)A violation of this part is an unfair or deceptive
  246  trade act or practice under part II of chapter 501.
  247         (2)A litigation financing transaction that does not comply
  248  with the provisions of this part is void and unenforceable, and
  249  the litigation financier has no right to collect, receive, or
  250  retain any principal, interest, or charges relating to such
  251  transaction.
  252         Section 11. This act shall take effect July 1, 2020.
  253  
  254  ================= T I T L E  A M E N D M E N T ================
  255  And the title is amended as follows:
  256         Delete everything before the enacting clause
  257  and insert:
  258                        A bill to be entitled                      
  259         An act relating to litigation financing consumer
  260         protection; creating the Litigation Financing Consumer
  261         Protection Act; creating s. 559.952, F.S.; defining
  262         terms; creating s. 559.953, F.S.; specifying mandatory
  263         litigation financing contract terms; creating s.
  264         559.954, F.S.; prohibiting litigation financiers from
  265         engaging in specified conduct; creating s. 559.955,
  266         F.S.; requiring specified mandatory litigation
  267         financing contract disclosures; creating s. 559.956,
  268         F.S.; authorizing a consumer to assign his or her
  269         contingent right to proceeds from a civil action or
  270         claim; establishing the priority of liens against or
  271         rights to civil action or claim proceeds; creating s.
  272         559.957, F.S.; authorizing litigation financiers to
  273         charge interest up to a specified amount annually;
  274         requiring simple interest computations for purposes of
  275         interest rates; specifying computations for a maximum
  276         annual, monthly, and daily percentage rate; providing
  277         a maximum interest accrual period; requiring that the
  278         total interest must be calculated based on the actual
  279         number of days for which interest accrued; capping the
  280         fees and charges that litigation financiers may
  281         assess; prohibiting a litigation financier from
  282         assessing specified fees or charges; creating s.
  283         559.958 , F.S.; requiring litigation financing
  284         contract disclosure under specified circumstances;
  285         creating s. 559.959 , F.S.; providing that specified
  286         communications between attorneys and litigation
  287         financiers do not limit or waive statutory or common
  288         law privilege; creating s. 559.961, F.S.; providing
  289         that a violation of this part is a violation of the
  290         Florida Deceptive and Unfair Trade Practices Act;
  291         providing that a contract that does not comply with
  292         the provisions of this part is void and unenforceable;
  293         providing an effective date.