Florida Senate - 2020                        COMMITTEE AMENDMENT
       Bill No. SB 1828
       
       
       
       
       
       
                                Ì491882BÎ491882                         
       
                              LEGISLATIVE ACTION                        
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       The Committee on Banking and Insurance (Thurston) 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, 559.959, and 559.961, is created and may be cited as
    8  the “Litigation Financing Consumer Protection Act.”
    9         Section 2. Section 559.952, Florida Statutes, is created to
   10  read:
   11         559.952Definitions.—As used in this part, the term:
   12         (1)“Consumer” means any individual residing, physically
   13  present, or domiciled in this state.
   14         (2)“Funded amount” means the funds actually received by,
   15  or on behalf of, a consumer under a litigation financing
   16  contract.
   17         (3)“Health care practitioner” has the same meaning as in
   18  s. 456.001.
   19         (4)“Interest” means the cost of obtaining litigation
   20  financing and includes any profit or advantage of any kind
   21  whatsoever that a litigation financier may charge, contract for,
   22  collect, receive, or in any way obtain as a condition of a
   23  litigation financing contract. Charges and fees specifically
   24  authorized by this part may not be deemed interest.
   25         (5)“Litigation financier” means a person engaged in the
   26  business of litigation financing.
   27         (6)“Litigation financing” means a nonrecourse transaction
   28  in which a litigation financier provides funds to a consumer in
   29  exchange for an assignment of the consumer’s contingent right to
   30  receive an amount of the potential proceeds of his or her civil
   31  action or claim. The term does not include any of the following:
   32         (a)Legal services provided to a consumer on a contingency
   33  fee basis or advanced legal costs, when such services or costs
   34  are provided by an attorney representing the consumer in
   35  accordance with the Florida Rules of Professional Conduct.
   36         (b)A commercial tort claim as defined in s.
   37  679.1021(1)(m).
   38         (c)Lending or financing arrangements between an attorney
   39  or a law firm and a lending institution to fund litigation
   40  costs.
   41         (d)A consumer finance loan as defined in s. 516.01.
   42         (7)“Net proceeds” means the portion of the proceeds of a
   43  civil action or claim remaining after satisfaction of all liens
   44  with a higher priority than that of the litigation financier as
   45  specified in s. 559.955(2).
   46         Section 3. Section 559.953, Florida Statutes, is created to
   47  read:
   48         559.953Litigation financing contracts; terms.—The terms of
   49  a litigation financing contract must be set forth in a written
   50  contract that is completely filled in with no incomplete
   51  sections when the contract is presented to the consumer. The
   52  contract must contain all of the following:
   53         (1)A right of rescission allowing the consumer to cancel
   54  the contract without penalty, interest, charges, fees, or
   55  further obligation if, within 5 business days after contract
   56  execution or funds receipt by the consumer, whichever is later,
   57  the consumer provides written rescission notice and returns any
   58  funds already provided under the contract to the litigation
   59  financier.
   60         (2)The consumer’s written acknowledgment of whether an
   61  attorney represents him or her in the civil action or claim that
   62  is the subject of the contract.
   63         (3)A statement indicating that, in the event the proceeds
   64  of the subject civil action or claim are paid into a settlement
   65  fund or trust, the litigation financier must notify the fund or
   66  trust administrator of any outstanding financial obligations
   67  arising from the contract.
   68         (4)The consumer’s initials on each page of the contract
   69  and the signature of the consumer on the executed contract.
   70         Section 4. Section 559.954, Florida Statutes, is created to
   71  read:
   72         559.954Prohibited acts.—A litigation financier may not:
   73         (1)Pay or offer to pay a commission, a referral fee, or
   74  other consideration to any person, including an attorney, a law
   75  firm, or a health care practitioner, for referring a consumer to
   76  a litigation financier.
   77         (2)Accept a commission, a referral fee, a rebate, or other
   78  consideration from any person, including an attorney, a law
   79  firm, or a health care practitioner.
   80         (3)Advertise false or misleading information about its
   81  products or services.
   82         (4)Refer a consumer to a specific attorney, law firm, or
   83  health care practitioner, except that, if a consumer lacks legal
   84  representation, the litigation financier may refer the consumer
   85  to an attorney referral service operated by a county or state
   86  bar association.
   87         (5)Fail to supply a copy of an executed litigation
   88  financing contract to the consumer upon execution of a contract.
   89         (6)Attempt to obtain a waiver of any remedy, including,
   90  but not limited to, compensatory, statutory, or punitive
   91  damages, which the consumer might otherwise have in the subject
   92  civil action or claim.
   93         (7)Attempt to effect arbitration or waiver of a consumer’s
   94  right to a jury trial in the subject civil action or claim.
   95         (8)Offer or provide legal advice to the consumer regarding
   96  the litigation financing contract or the subject civil action or
   97  claim.
   98         (9)Report to a consumer credit reporting agency if
   99  insufficient funds remain from the net proceeds of the subject
  100  civil action or claim to repay the litigation financier.
  101         (10)Direct, or make any decisions with respect to, the
  102  conduct of the subject civil action or claim or any settlement
  103  thereof.
  104         (11)Enter into a litigation financing contract with a
  105  consumer incorporating the consumer’s obligations to the
  106  litigation financier under an existing litigation financing
  107  contract.
  108         (12)Knowingly enter into a litigation financing contract
  109  with a consumer already under a litigation financing contract
  110  with another litigation financier without first paying the
  111  entire funded amount and all charges owed under the existing
  112  contract, unless the consumer consents to a contemporaneous
  113  financing arrangement in writing.
  114         (13)Provide litigation financing for a claim under chapter
  115  440.
  116         Section 5. Section 559.955, Florida Statutes, is created to
  117  read:
  118         559.955Required disclosures.—
  119         (1)A litigation financing contract must contain all of the
  120  following disclosures on the front page of the contract in at
  121  least 12-point boldfaced type:
  122         (a)Notice of the consumer’s right to a copy of the fully
  123  executed contract upon execution of the contract.
  124         (b)A statement that the litigation financier has no right
  125  to and will not make any decisions or attempt to influence the
  126  consumer or his or her attorney about the conduct of the civil
  127  action or claim subject to the contract and that the right to
  128  make such decisions remains solely with the consumer.
  129         (c)The total funded amount provided to the consumer.
  130         (d)An itemized list of all charges and fees payable by the
  131  consumer.
  132         (e)The interest rate.
  133         (f)The total amount due from the consumer in 6-month
  134  intervals for 3 years, including all charges, fees, and
  135  interest.
  136         (g)A statement that the consumer will owe no charges,
  137  fees, or interest other than those described in the disclosures.
  138         (h)The cumulative amount due from the consumer for all
  139  litigation financing contracts if the consumer seeks multiple
  140  contracts and makes repayment any time after contract execution.
  141         (i)Notice that if the consumer recovers nothing from the
  142  subject civil action or claim, he or she will owe the litigation
  143  financier nothing.
  144         (j)Notice that if the net proceeds of the subject civil
  145  action or claim are insufficient to fully repay the litigation
  146  financier, the litigation financier will accept a reduced sum as
  147  full payment of the funded amount and all charges, fees, and
  148  interest owed, which sum may not exceed the net proceeds less
  149  proceeds specifically awarded for future medical expenses.
  150         (2)A litigation financing contract must also contain the
  151  following disclosure on the front page of the contract in at
  152  least 18-point uppercase and boldfaced type:
  153  
  154         CONSUMER’S RIGHT TO CANCELLATION: YOU MAY CANCEL THIS
  155  CONTRACT WITHOUT PENALTY, INTEREST, CHARGES, FEES, OR FURTHER
  156  OBLIGATION WITHIN 5 BUSINESS DAYS FROM THE DATE OF CONTRACT
  157  EXECUTION OR RECEIVING FUNDS FROM [INSERT NAME OF THE LITIGATION
  158  FINANCIER], WHICHEVER IS LATER, BY GIVING WRITTEN NOTICE OF THE
  159  CANCELLATION AND BY RETURNING THE FUNDS TO [INSERT NAME OF THE
  160  LITIGATION FINANCIER]. FOR PURPOSES OF THE DEADLINE, THE
  161  POSTMARK DATE ON FUNDS RETURNED BY REGULAR U.S. MAIL, OR THE
  162  DATE OF THE RETURN RECEIPT REQUESTED IF MAILED BY CERTIFIED
  163  MAIL, WILL BE CONSIDERED THE DATE OF RETURN OF THE FUNDS.
  164  
  165         (3)A litigation financing contract must contain the
  166  following disclosure immediately above the consumer’s signature
  167  line in 18-point uppercase and boldfaced type:
  168  
  169         DO NOT SIGN THIS CONTRACT BEFORE READING IT COMPLETELY OR
  170  IF THE CONTRACT CONTAINS ANY INCOMPLETE OR BLANK SECTIONS.
  171  BEFORE YOU SIGN THIS CONTRACT, YOU SHOULD CONSULT AN ATTORNEY.
  172  YOU MAY ALSO WANT TO CONSULT A TAX ADVISOR, A FINANCIAL ADVISOR,
  173  OR AN ACCOUNTANT.
  174         Section 6. Section 559.956, Florida Statutes, is created to
  175  read:
  176         559.956Contingent right to proceeds assignable; priority
  177  of lien or right to proceeds.—
  178         (1)A consumer may assign his or her contingent right to an
  179  amount of the potential proceeds of a civil action or claim.
  180         (2)A litigation financier’s lien on the potential proceeds
  181  of a civil action or claim has priority over liens that attach
  182  to such proceeds subsequent to the attachment of the litigation
  183  financier’s lien, except for any of the following:
  184         (a)Attorney, insurer, or health care practitioner liens or
  185  liens based upon subrogation interests or reimbursement rights
  186  related to the subject civil action or claim.
  187         (b)Child support, Medicare, tax, or any other statutory or
  188  governmental lien.
  189         Section 7. Section 559.959, Florida Statutes, is created to
  190  read:
  191         559.959Effect of communication on privilege.
  192  Communications between a consumer’s attorney and a litigation
  193  financier as it pertains to a litigation financing contract do
  194  not limit, waive, or abrogate the scope or nature of any
  195  statutory or common-law privilege, including the work-product
  196  doctrine and the attorney-client privilege.
  197         Section 8. Section 559.961, Florida Statutes, is created to
  198  read:
  199         559.961Violation; enforcement.—
  200         (1)A violation of this part is an unfair or deceptive
  201  trade act or practice under part II of chapter 501.
  202         (2)A litigation financing transaction that does not comply
  203  with the provisions of this part is void and unenforceable, and
  204  the litigation financier has no right to collect, receive, or
  205  retain any principal, interest, or charges relating to such
  206  transaction.
  207         Section 9. This act shall take effect July 1, 2020.
  208  
  209  ================= T I T L E  A M E N D M E N T ================
  210  And the title is amended as follows:
  211         Delete everything before the enacting clause
  212  and insert:
  213                        A bill to be entitled                      
  214         An act relating to litigation financing consumer
  215         protection; creating the Litigation Financing Consumer
  216         Protection Act; creating s. 559.952, F.S.; defining
  217         terms; creating s. 559.953, F.S.; specifying mandatory
  218         litigation financing contract terms; creating s.
  219         559.954, F.S.; prohibiting litigation financiers from
  220         engaging in specified conduct; creating s. 559.955,
  221         F.S.; requiring specified mandatory litigation
  222         financing contract disclosures; creating s. 559.956,
  223         F.S.; authorizing a consumer to assign his or her
  224         contingent right to proceeds from a civil action or
  225         claim; establishing the priority of liens against or
  226         rights to civil action or claim proceeds; creating s.
  227         559.959, F.S.; providing that specified communications
  228         between attorneys and litigation financiers do not
  229         limit or waive statutory or common-law privilege;
  230         creating s. 559.961, F.S.; providing that a violation
  231         of this part is a violation of the Florida Deceptive
  232         and Unfair Trade Practices Act; providing that a
  233         contract that does not comply with the provisions of
  234         this part is void and unenforceable; providing an
  235         effective date.