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HB 1274

Consumer Protection - Third-Party Litigation Financing

2025 Regular Session Introduced by Andre Johnson

HB 1274 regulates third-party litigation financing by requiring disclosure, capping fees, and establishing cooling-off periods to protect consumers from exploitative financing agreements.

Hearing 3/04 at 1:00 p.m.
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Bill Summary · HB 1274

Legislative bill overview

HB 1274 establishes regulatory requirements for third-party litigation financing (TPLF) agreements, which are contracts where non-parties fund lawsuits in exchange for a percentage of settlement proceeds or judgments. The bill would require disclosure of financing terms, set limits on fees, and mandate cooling-off periods for consumers entering these agreements.

Why is this important

Third-party litigation financing has grown substantially, allowing cash-strapped plaintiffs to pursue cases they couldn't otherwise afford—but often at steep costs that can consume 40-50% of awards. This bill attempts to balance access to justice against potential exploitation, as vulnerable consumers may accept unfavorable terms under financial pressure.

Potential points of contention

  • Cost impact on plaintiffs: Stricter fee caps could reduce lenders' willingness to finance risky cases, potentially limiting access to justice for those without resources
  • Business concerns: Litigation finance companies argue heavy regulation drives their business to other states, reducing capital available for consumer lawsuits
  • Scope ambiguity: The bill's definition of what constitutes TPLF may inadvertently capture related financing models (settlement advances, legal fee financing) or create loopholes through alternative structures

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

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