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Bill

EP

Bill

A 1931

"Consumer Legal Funding Act."

2024-2025 Regular Session Introduced by Ellen Park and 1 co-sponsor

Bill establishes licensing, disclosure requirements, and rate caps for consumer legal funding companies providing cash advances against lawsuit settlements.

Introduced in the Assembly, Referred to Assembly Consumer Affairs Committee
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WeVote Research Nonpartisan
Bill Summary · A 1931

Legislative bill overview

This bill establishes a regulatory framework for consumer legal funding, also known as litigation financing or lawsuit loans. The legislation would create licensing requirements, disclosure standards, and interest rate limits for companies that provide upfront cash to plaintiffs in exchange for a portion of their lawsuit settlements or judgments.

Why is this important

Legal funding can provide crucial financial relief to individuals awaiting settlement in personal injury or other civil cases, but the industry has historically operated with minimal oversight, sometimes charging interest rates exceeding 100% annually. This bill addresses a real gap in consumer protection while potentially making legal disputes more financially accessible to those unable to wait months or years for resolution.

Potential points of contention

  • Interest rate caps vs. market availability: Strict rate limits may reduce the number of companies willing to offer funding, potentially making capital less available to consumers who need it most
  • Impact on settlements: Requiring large portions of settlements to fund companies may reduce net recovery for plaintiffs, potentially incentivizing settlement of weak cases
  • Definition and scope disputes: Determining which financial products count as "legal funding" versus legitimate personal loans or credit products could create regulatory ambiguity

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

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