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SB 534

AN ACT RELATING TO COURTS AND CIVIL PROCEDURE -- PROCEDURE GENERALLY -- THIRD-PARTY LITIGATION FINANCING CONSUMER PROTECTION ACT

2025 Regular Session Introduced by Sam Bell and 2 co-sponsors

SB 534 regulates third-party litigation financing by requiring disclosure, limiting fees, and imposing consumer protections to prevent predatory terms in plaintiff funding agreements.

03/13/2025 Committee recommended measure be held for further study
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Bill Summary · SB 534

Legislative bill overview

SB 534 establishes consumer protection regulations for third-party litigation financing (TPLF)—where non-parties fund lawsuits in exchange for a portion of settlement proceeds. The bill aims to impose transparency, disclosure, and fee limitation requirements on litigation funders to protect plaintiffs from predatory financing terms and ensure they understand the costs of accepting litigation funding.

Why is this important

Third-party litigation financing has grown significantly, allowing injured parties without resources to pursue claims they otherwise couldn't afford. However, without regulation, funders can charge extremely high interest rates (sometimes 50-100%+ returns) and impose unfavorable terms, potentially reducing what injured parties actually recover. Clear rules protect vulnerable plaintiffs while maintaining access to justice for those without means.

Potential points of contention

  • Business impact: Litigation funders argue strict regulations increase their risk costs, potentially making funding less available or more expensive for plaintiffs, particularly in lower-value cases
  • Plaintiff autonomy vs. paternalism: Debate over whether government should limit what consenting adults can voluntarily agree to, or whether plaintiffs need protection from imbalanced bargaining power
  • Enforcement mechanisms: Questions about who monitors compliance, what penalties apply to violators, and whether Rhode Island courts have capacity to adjudicate disputes over financing agreements

Compiled from official sources — confirm details with the bill’s official record.

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