Florida Senate - 2020 COMMITTEE AMENDMENT
Bill No. SB 1828
Ì7937528Î793752
LEGISLATIVE ACTION
Senate . House
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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:
12 559.952 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) 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:
121 559.955 Required 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:
179 559.956 Contingent 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:
195 559.957 Interest, 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:
228 559.958 Litigation 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:
236 559.959 Effect 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:
244 559.961 Violation; 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.