Missouri’s House of Representatives recently introduced the “Consumer Litigation Funding Model Act” in an effort to regulate disclosure of litigation funding agreements at the time of case discovery. If the bill is passed into law, all litigation finance investments would be regulated by Missouri’s Department of Commerce and Insurance. The bill appears to be a lobbying product of the American Property and Casualty Insurance Association.
Does Consumer Legal Funding Put Consumers in Debt?
Missouri’s House of Representatives recently introduced the “Consumer Litigation Funding Model Act” in an effort to regulate disclosure of litigation funding agreements at the time of case discovery. If the bill is passed into law, all litigation finance investments would be regulated by Missouri’s Department of Commerce and Insurance. The bill appears to be a lobbying product of the American Property and Casualty Insurance Association.
BusinessInsurance.com reports that the bill states that “… A consumer or the consumer’s legal representative shall, without awaiting a discovery request, provide to all parties to the litigation, including the consumer’s insurer if prior to litigation, any litigation financing contract or agreement under which anyone, other than a legal representative permitted to charge a contingent fee representing a party, has a right to receive compensation or proceeds from the consumer that are contingent on and sourced from any proceeds of the civil action, by settlement, judgment, or otherwise.”
Additionally, the bill would guarantee regulation on various consumer protections such as being able to cancel a litigation funding agreement within a five day grace period. Also, if a case is won but the collected damages are less than the litigation funder’s investment, the claimant would not be responsible for the excess of the recovery, according to the bill.
