Source: https://www.nysenate.gov/legislation/bills/2017/s3911/amendment/a
Timestamp: 2019-02-21 10:26:44
Document Index: 180532913

Matched Legal Cases: ['Art 39', '§899', 'arty\n899', '§  899', '§ 899', 'ART.\n7', '§  899', '§  899', '§ 899', '§  899', '§ 899', '§  899']

NY State Senate Bill S3911A
senate Bill S3911A
Get Status Alerts for S3911A
May 25, 2018 print number 3911b
May 25, 2018 amend and recommit to consumer protection
May 16, 2017 1st report cal.997
Mar 13, 2017 print number 3911a
Mar 13, 2017 amend and recommit to consumer protection
Jan 30, 2017 referred to consumer protection
S3911 (ACTIVE) - Details
Add Art 39-H §§899-ccc - 899-ggg, Gen Bus L
S3911 (ACTIVE) - Summary
S3911 (ACTIVE) - Sponsor Memo
BILL NUMBER:  S3911
relation to third party litigation financing
The bill establishes specific guidelines and provisions to regulate
the third party litigation financing industry in New York State
Section 1 amends the general business law by adding a new article
(39-H). The first part of this section, 899-ccc, establishes
definitions in relation to third party litigation financing and the
regulation of this industry. Section 899-ddd sets forth contract
requirements for third party litigation financing companies. Section
899-eee sets forth prohibitions for third party litigation financing
companies and all parties involved in funded cases. Section 899-fff
sets forth registration requirements for third party litigation
financing companies to legally practice in New York State by
registering with the department of financial services. Section 899-ggg
establishes penalties for violating any provisions of this article.
Third Party Litigation financing emerged as an industry in the US in
the 1990s. Companies only collect repayments in the event of an award
or settlement. However, as there is no recourse if the claimant loses
the suit, regular lending and collection caps do not apply to these
financing companies. As a result, collected fees have the potential to
reach outrageous and even usurious rates.
The industry is currently unregulated, exposing potential clients to
risk. This legislation instructs companies to register with the
Department of State, which will have discretionary regulation over the
industry. Additionally, it mandates financing companies to disclose
their fee structure and repayment terms, better educating consumers to
the terms of their contract and provides means of recourse against
unscrupulous practices. Furthermore, this legislation subjects these
companies to abide by the maximum interest rates on loans put forth by
existing statute. This bill also sets guidelines to eliminate
potential conflicts of interest in the industry and establish
penalties for companies found in violation of these provisions.
S. 8006, Passed Senate in 2016.
S3911 (ACTIVE) - Bill Text download pdf
AN ACT to amend the general business law, in  relation  to  third  party
899-DDD. CONTRACT REQUIREMENTS.
899-EEE. PROHIBITIONS.
899-FFF. REGISTRATION.
899-GGG. PENALTY FOR VIOLATION.
1. "CHARGES" SHALL MEAN THE AMOUNT OF MONEY TO BE PAID TO THE CONSUMER
LITIGATION  FUNDING  COMPANY THAT EXCEEDS THE FUNDED AMOUNT OF PRINCIPAL
2. "CONSUMER LITIGATION FUNDING COMPANY" SHALL MEAN A PERSON OR ENTITY
THAT ENTERS INTO A NON-RECOURSE TRANSACTION WHEREIN THE COMPANY PROVIDES
FUNDS TO A CONSUMER ON THE CONTINGENT RIGHT TO RECEIVE THE FUNDED AMOUNT
AND AGREED UPON CHARGES OBTAINED IN THE EVENT OF A SETTLEMENT,  JUDGMENT
3.  "FUNDED  AMOUNT"  SHALL  MEAN  THE AMOUNT OF MONEY PROVIDED TO THE
CONSUMER IN CONSUMER LITIGATION FINANCING.
4. "RESOLUTION DATE" SHALL MEAN THE DATE THE FUNDED AMOUNT AND  AGREED
UPON CHARGES ARE DELIVERED TO THE CONSUMER LITIGATION FINANCING COMPANY.
§  899-DDD.  CONTRACT REQUIREMENTS. 1. CONTRACTS SHALL CONTAIN A RIGHT
OF RESCISSION, ALLOWING THE CONSUMER TO CANCEL THE  CONTRACT  WITHOUT  A
LBD04763-01-7
PENALTY  IF  THE  CONSUMER RETURNS THE FULL AMOUNT OF DISBURSED FUNDS TO
THE COMPANY WITHIN TEN BUSINESS DAYS.
2.  CONTRACTS  SHALL CONTAIN A WRITTEN ACKNOWLEDGEMENT BY THE ATTORNEY
RETAINED BY THE CONSUMER THAT ATTESTS:
(A) THE ATTORNEY IS BEING PAID ON A CONTINGENCY BASIS  PURSUANT  TO  A
WRITTEN FEE AGREEMENT; AND
(B)  THE  ATTORNEY IS NOT RECEIVING A REFERRAL FEE FROM THE LITIGATION
FUNDING COMPANY IN CONNECTION WITH THE CONSUMER'S FUNDING.
3. CONTRACTS SHALL CLEARLY OUTLINE  A  SCHEDULED  FEE  STRUCTURE  THAT
OUTLINES REPAYMENT TERMS INCLUDING:
(A) THE FUNDED AMOUNT PLUS CHARGES WRITTEN OUT AS ITEMIZED AMOUNTS;
(B)  THE  CHARGES OUTLINED AS A PERCENTAGE AMOUNT EXCEEDING THE FUNDED
(C) ITEMIZED ONE-TIME FEES INCLUDING PAPERWORK PROCESSING AND ADMINIS-
TRATIVE FEES.
4. CONTRACTS SHALL CONTAIN A NO PENALTY PROVISION FOR THE  PRE-PAYMENT
OF  THE  FUNDED  AMOUNT PRIOR TO THE SETTLEMENT OF HIS OR HER CASE. SUCH
PROVISION SHALL RELEASE THE CONSUMER FROM ANY OBLIGATION TO SHARE HIS OR
HER SETTLEMENT OR VERDICT.
§ 899-EEE. PROHIBITIONS.  1.  CONSUMER  LITIGATION  FUNDING  COMPANIES
SHALL  BE PROHIBITED FROM PAYING, ACCEPTING OR OFFERING REFERRAL FEES OR
ANY TYPE OF CONSIDERATION TO AND FROM ANY  MEDICAL  PROVIDERS,  LICENSED
THERAPISTS OR ATTORNEYS FOR REFERRING A CONSUMER TO THE COMPANY.
2.  THE COMPANY SHALL BE PROHIBITED FROM MAKING ANY INQUIRIES WITH THE
CONSUMER'S REPRESENTATIVE ATTORNEY THAT WOULD VIOLATE THE TERMS  OF  THE
ATTORNEY-CLIENT PRIVILEGE AT ANY POINT IN TIME.
3.  NO ATTORNEY OR LAW FIRM RETAINED BY A CONSUMER THAT UTILIZES LITI-
GATION FINANCING MAY HAVE A FINANCIAL INTEREST IN SAID COMPANY.
4. CONSUMER LITIGATION FUNDING  COMPANIES  SHALL  BE  PROHIBITED  FROM
ATTEMPTING TO OBTAIN, OR OBTAINING A WAIVER OF ANY REMEDY, INCLUDING BUT
NOT  LIMITED  TO,  COMPENSATORY, STATUTORY OR PUNITIVE DAMAGES, THAT THE
CONSUMER MIGHT OTHERWISE HAVE.
5. CONSUMER LITIGATION FUNDING  COMPANIES  SHALL  BE  PROHIBITED  FROM
ATTEMPTING TO EFFECT ARBITRATION OR OTHERWISE EFFECT WAIVER OF A CONSUM-
ER'S  RIGHT  TO  TRIAL  BY JURY FOR COMPLAINTS ARISING FROM THE CONSUMER
LITIGATION FUNDING TRANSACTION.
6. CONSUMER LITIGATION FUNDING  COMPANIES  SHALL  BE  PROHIBITED  FROM
ASSIGNING A CONSUMER LITIGATION FUNDING CONTRACT IN WHOLE OR IN PART.
7. MAXIMUM AMOUNT OF CHARGES:
(A)  THE MAXIMUM AMOUNT OF CHARGES WHICH MAY BE ASSESSED PURSUANT TO A
CONSUMER LITIGATION FUNDING CONTRACT SHALL NOT BE IN EXCESS OF THE  RATE
PRESCRIBED IN SECTION FOURTEEN-A OF THE BANKING LAW, WHEN EXPRESSED AS A
PROPORTION OF THE FUNDED AMOUNT; AND
(B)  ANY  CONSUMER LITIGATION FUNDING CONTRACT WHICH EXCEEDS SUCH RATE
SHALL BE CONSIDERED USURIOUS AS DEFINED BY SECTION 5-501 OF THE  GENERAL
§  899-FFF.  REGISTRATION. 1. EACH CONSUMER LITIGATION FUNDING COMPANY
THAT WISHES TO ENGAGE IN BUSINESS IN THE STATE OF NEW YORK  SHALL  FIRST
REGISTER WITH THE NEW YORK DEPARTMENT OF FINANCIAL SERVICES.
2.  EACH APPLICANT'S REGISTRATION MUST BE FILED IN A MANNER PRESCRIBED
BY THE NEW YORK DEPARTMENT OF FINANCIAL SERVICES WITH AN INITIAL  ACCOM-
PANIED  FEE OF FIVE HUNDRED DOLLARS. REGISTRATIONS MUST BE RENEWED EVERY
TWO YEARS ON OR BEFORE THE THIRTIETH DAY OF SEPTEMBER.
3. THE NEW YORK DEPARTMENT OF FINANCIAL SERVICES SHALL  ISSUE  CERTIF-
ICATES  OF  REGISTRATION  AFTER  BOTH UNDERSTANDING AND ATTESTING TO THE
CHARACTER AND FITNESS OF THE APPLICANT COMPANY WITH SUFFICIENT REASON TO
BELIEVE THE COMPANY WILL OPERATE HONESTLY AND FAIRLY.
§  899-GGG.  PENALTY  FOR VIOLATION. ANY COMPANY FOUND IN VIOLATION OF
ANY PROVISIONS OF THIS ARTICLE IN A SPECIFIC FUNDING  CASE,  WAIVES  ITS
RIGHT  TO RECOVER BOTH THE FUNDED AMOUNT AND ANY ADDITIONAL FEES IN THAT
S3911A (ACTIVE) - Details
S3911A (ACTIVE) - Summary
S3911A (ACTIVE) - Sponsor Memo
the third party consumer litigation financing industry in New York
definitions in relation to third party consumer litigation financing
and the regulation of this industry. Section 899-ddd sets forth
contract requirements for third party consumer litigation financing
companies. Section 899-eee sets for prohibitions for third party
consumer litigation financing companies and all parties involved in
funded cases. Section 899-fff sets forth registration requirements for
third party consumer litigation financing companies to legally
practice in New York State by registering with the department of
financial services. Section 899-ggg establishes penalties for
violating any provisions of this article.
Third Party consumer litigation financing emerged as an industry in
the US in the1990s. Companies only collect repayments in the event of
an award or settlement. However, as there is no recourse if the
claimant loses the suit, regular lending and collection caps do not
apply to these financing companies. As a result, collected fees have
the potential to reach outrageous and even usurious rates.
S3911A (ACTIVE) - Bill Text download pdf
Introduced  by  Sens.  ORTT,  AKSHAR,  HANNON, HELMING -- read twice and
THAT ENTERS INTO A CONSUMER LITIGATION FUNDING CONTRACT TO PROVIDE  NON-
RECOURSE  FUNDING  OF  NO  MORE  THAN FIVE HUNDRED THOUSAND DOLLARS TO A
3. "CONSUMER LITIGATION FUNDING CONTRACT" SHALL  MEAN  A  CONTRACT  TO
PROVIDE  NON-RECOURSE  FUNDING  OF  NO  MORE  THAN FIVE HUNDRED THOUSAND
DOLLARS TO A CONSUMER ON THE CONTINGENT  RIGHT  TO  RECEIVE  THE  FUNDED
AMOUNT  AND  AGREED  UPON CHARGES OBTAINED IN THE EVENT OF A SETTLEMENT,
LBD04763-03-7
4. "FUNDED AMOUNT" SHALL MEAN THE AMOUNT  OF  MONEY  PROVIDED  TO  THE
5.  "RESOLUTION DATE" SHALL MEAN THE DATE THE FUNDED AMOUNT AND AGREED
§ 899-DDD.  CONTRACT  REQUIREMENTS.  1.  CONSUMER  LITIGATION  FUNDING
CONTRACTS  SHALL CONTAIN A RIGHT OF RESCISSION, ALLOWING THE CONSUMER TO
CANCEL THE CONSUMER LITIGATION FUNDING CONTRACT WITHOUT A PENALTY IF THE
CONSUMER RETURNS THE FULL AMOUNT OF DISBURSED FUNDS TO THE COMPANY WITH-
2. CONSUMER LITIGATION  FUNDING  CONTRACTS  SHALL  CONTAIN  A  WRITTEN
ACKNOWLEDGEMENT BY THE ATTORNEY RETAINED BY THE CONSUMER THAT ATTESTS:
(A)  THE  ATTORNEY  IS BEING PAID ON A CONTINGENCY BASIS PURSUANT TO A
(B) THE ATTORNEY IS NOT RECEIVING A REFERRAL FEE FROM  THE  LITIGATION
3. CONSUMER LITIGATION FUNDING CONTRACTS SHALL CLEARLY OUTLINE A SCHE-
DULED FEE STRUCTURE THAT OUTLINES REPAYMENT TERMS INCLUDING:
4. CONSUMER LITIGATION FUNDING CONTRACTS SHALL CONTAIN  A  NO  PENALTY
PROVISION  FOR THE PRE-PAYMENT OF THE FUNDED AMOUNT PRIOR TO THE SETTLE-
MENT OF HIS OR HER CASE. SUCH PROVISION SHALL RELEASE THE CONSUMER  FROM
ANY OBLIGATION TO SHARE HIS OR HER SETTLEMENT OR VERDICT.
§  899-EEE.  PROHIBITIONS.  1.  CONSUMER  LITIGATION FUNDING COMPANIES
SHALL BE PROHIBITED FROM PAYING, ACCEPTING OR OFFERING REFERRAL FEES  OR
ANY  TYPE  OF  CONSIDERATION TO AND FROM ANY MEDICAL PROVIDERS, LICENSED
THERAPISTS OR ATTORNEYS FOR REFERRING A CONSUMER TO THE COMPANY FOR  THE
PURPOSE OF ENTERING INTO A CONSUMER LITIGATION FUNDING CONTRACT.
3. NO ATTORNEY OR LAW FIRM RETAINED BY A CONSUMER WHO HAS ENTERED INTO
A  CONSUMER LITIGATION FUNDING CONTRACT WITH A CONSUMER LITIGATION FUND-
ING COMPANY MAY HAVE A FINANCIAL INTEREST IN SAID COMPANY.
LITIGATION FUNDING CONTRACT.
§ 899-GGG. PENALTY FOR VIOLATION. ANY COMPANY FOUND  IN  VIOLATION  OF
ANY  PROVISIONS  OF  THIS ARTICLE IN A SPECIFIC FUNDING CASE, WAIVES ITS
RIGHT TO RECOVER BOTH THE FUNDED AMOUNT AND ANY ADDITIONAL FEES IN  THAT
BILL NUMBER: S3911B
to third party litigation financing
The bill establishes specific guidelines and provisions to regulate the
third party consumer litigation financing industry in New York State
(39-H). The first part of this section, 899-ccc, establishes definitions
in relation to third party consumer litigation financing and the regu-
lation of this industry. Section 899-ddd sets forth contract require-
ments for third party consumer litigation financing companies. Section
899- eee sets for prohibitions for third party consumer litigation
financing companies and all parties involved in funded cases. Section
899-fff sets forth registration requirements for third party consumer
litigation financing companies to legally practice in New York State by
Third Party consumer litigation financing emerged as an industry in the
US in the1990s. Companies only collect repayments in the event of an
award or settlement. However, as there is no recourse if the claimant
loses the suit, regular lending and collection caps do not apply to
these financing companies. As a result, collected fees have the poten-
tial to reach outrageous and even usurious rates.
risk. This legislation instructs companies to register with the Depart-
ment of State, which will have discretionary regulation over the indus-
try. Additionally, it mandates financing companies to disclose their fee
structure and repayment terms, better educating consumers to the terms
of their contract and provides means of recourse against unscrupulous
practices. Furthermore, this legislation subjects these companies to
abide by the maximum interest rates on loans put forth by existing stat-
ute. This bill also sets guidelines to eliminate potential conflicts of
interest in the industry and establish penalties for companies found in
Introduced  by  Sens.  ORTT,  AKSHAR, GALLIVAN, HANNON, HELMING, JACOBS,
MARCHIONE -- read twice and ordered printed, and when  printed  to  be
LBD04763-05-8
S. 3911--B                          2
4.  "FUNDED  AMOUNT"  SHALL  MEAN  THE AMOUNT OF MONEY PROVIDED TO THE
5. "RESOLUTION DATE" SHALL MEAN THE DATE THE FUNDED AMOUNT AND  AGREED
§  899-DDD.  CONTRACT  REQUIREMENTS.  1.  CONSUMER  LITIGATION FUNDING
CONTRACTS SHALL CONTAIN A RIGHT OF RESCISSION, ALLOWING THE CONSUMER  TO
2.  CONSUMER  LITIGATION  FUNDING  CONTRACTS  SHALL  CONTAIN A WRITTEN
(B) THE CHARGES OUTLINED AS A PERCENTAGE AMOUNT EXCEEDING  THE  FUNDED
4.  CONSUMER  LITIGATION  FUNDING CONTRACTS SHALL CONTAIN A NO PENALTY
PROVISION FOR THE PRE-PAYMENT OF THE FUNDED AMOUNT PRIOR TO THE  SETTLE-
MENT  OF HIS OR HER CASE. SUCH PROVISION SHALL RELEASE THE CONSUMER FROM
THERAPISTS  OR ATTORNEYS FOR REFERRING A CONSUMER TO THE COMPANY FOR THE
2. THE COMPANY SHALL BE PROHIBITED FROM MAKING ANY INQUIRIES WITH  THE
CONSUMER'S  REPRESENTATIVE  ATTORNEY THAT WOULD VIOLATE THE TERMS OF THE
A CONSUMER LITIGATION FUNDING CONTRACT WITH A CONSUMER LITIGATION  FUND-
4.  CONSUMER  LITIGATION  FUNDING  COMPANIES  SHALL BE PROHIBITED FROM
NOT LIMITED TO, COMPENSATORY, STATUTORY OR PUNITIVE  DAMAGES,  THAT  THE
5.  CONSUMER  LITIGATION  FUNDING  COMPANIES  SHALL BE PROHIBITED FROM
ER'S RIGHT TO TRIAL BY JURY FOR COMPLAINTS  ARISING  FROM  THE  CONSUMER
6.  CONSUMER  LITIGATION  FUNDING  COMPANIES  SHALL BE PROHIBITED FROM
(A) THE MAXIMUM AMOUNT OF CHARGES WHICH MAY BE ASSESSED PURSUANT TO  A
CONSUMER  LITIGATION FUNDING CONTRACT SHALL NOT BE IN EXCESS OF THE RATE
S. 3911--B                          3
PRESCRIBED IN SECTION 190.42 OF THE PENAL LAW  (CRIMINAL  USURY  IN  THE
FIRST DEGREE), WHEN EXPRESSED AS A PROPORTION OF THE FUNDED AMOUNT; AND