HB 1372 — North Dakota (124th Legislative Assembly)
Summary — Litigation Financing (Title 13, NDCC)
Status & Procedural History
- Introduced: November 18, 2024.
- Sponsor(s): Rep. Rick Klemin; Sen. Larson (as shown in the bill text).
- Status: Reached second reading but failed to pass (Second reading — failed to pass, yeas 1, nays 91).
- Purpose stated in caption: create and enact a new chapter to Title 13 of the North Dakota Century Code relating to litigation financing; provide a penalty; and provide for application.
Main purpose and intent
- Establish a statutory framework to regulate third‑party litigation financing (sometimes called lawsuit lending or litigation funding) in North Dakota by creating a new chapter in Title 13. The bill is aimed at licensing and supervising “litigation financers,” defining key terms, and imposing regulatory requirements and penalties for noncompliance.
Key provisions (based on available text)
- Definitions: The bill defines terms including “consumer,” “entity,” “legal representative,” “litigation financer,” “litigation financing,” “litigation financing contract,” “foreign country or person of concern,” “foreign entity of concern,” “regulated lender,” and “nationwide multistate licensing system.”
- Licensing requirement: A person or entity may not engage in litigation financing in North Dakota unless licensed by the Commissioner of Financial Institutions.
- Eligibility and good standing: If the applicant is an entity, it must be active and in good standing with the North Dakota Secretary of State.
- Application content and update duty: Applicants must submit a written, sworn application in a commissioner‑prescribed form. The application must include contact and office information, registered agent, and other information the commissioner requires. A licensed financer must file an amended application within 20 business days when previously filed information changes.
- Fees and fund: At application, an applicant must pay a nonrefundable $400 investigation fee and a $400 annual license fee. Fees are to be deposited in the state’s financial institution regulatory fund.
- Use of multistate system: The commissioner may use the Nationwide Multistate Licensing System (NMLS) or an equivalent registry to administer licensing.
- Records and public access: Documents and information filed with the commissioner are designated public records (i.e., not confidential in the available excerpt).
- Regulatory authority: The commissioner is designated as the regulatory authority (the bill creates the role/authority of the commissioner to license and supervise litigation financers).
- Penalty: The bill’s caption and early language indicate it provides for a penalty for violations, though the excerpted text does not contain the specific penalty language.
Who would be affected
- Litigation financers (domestic and foreign entities) seeking to do business in North Dakota would be required to obtain and maintain a license.
- Consumers (plaintiffs or claimants domiciled, present, or residing in ND) whose claims are the subject of funding.
- Legal representatives/attorneys (distinguished in the definitions) — the bill excludes ordinary contingency agreements between lawyers and clients from the definition of a litigation financing contract.
- Regulated lenders and other financial institutions are referenced (some are expressly excluded from the definition of litigation financer).
Potential impacts and aims
- Increased oversight and consumer protections: licensing, public filing requirements, and commissioner oversight are intended to increase transparency of litigation financing arrangements and to enable state enforcement.
- Regulatory costs: modest administrative revenue from fees; implementation costs expected to be absorbed by the Commissioner’s regulatory fund. (Specific fiscal impacts not included in the excerpt.)
- Market effects: may deter unlicensed providers (including certain foreign entities of concern) and raise compliance costs for funders; could alter availability or terms of third‑party litigation financing within the state.
Notable limitations / missing detail
- The excerpt is truncated. Important specifics were not available in the provided text: required disclosures to consumers, contract standards (e.g., maximum fee/return, usury treatment), capital/bonding or net worth requirements, prohibited practices, enforcement mechanisms and the exact penalties (civil/criminal), reporting/form‑filing frequency, and transitional provisions. Those provisions — if present — would materially affect the bill’s reach and consumer protections.
Recommendation for readers
- Consult the complete enrolled/introduced bill text and the legislative analysis or committee reports for the full set of operational rules, enforcement provisions, and the exact penalty provisions before drawing firm conclusions about compliance obligations or consumer effects.
