Bill
HB 5281
HB 5281 requires third-party litigation funders to register, disclose key terms, cap fees at 36% per year, and restrict foreign funding to protect consumers.
Status & procedural history
- Title: Third-Party Litigation Funding Transparency Act (creates a new act)
- Bill number: HB 5281
- Introduced: March 14, 2025; reintroduced/elec. reproduced Nov 12–13, 2025
- Introduced/sponsor: Rep. Mike Harris (and listed co-sponsors in the House Introduced version)
- Committee referrals / actions: Filed 3/14/2025; read first time 4/7/2025; referred to State Affairs (and later to Committee on Judiciary after 11/12/2025 reproduction). Bill not enacted (as of latest status).
Purpose / intent
- To regulate third‑party litigation funding (both consumer- and commercial-focused transactions) by increasing transparency, imposing registration and disclosure requirements, establishing duties for funders and attorneys, restricting certain funding sources, and authorizing civil penalties and administrative oversight.
Key definitions (selected)
- Consumer litigation funding: a nonrecourse transaction in which a consumer assigns to a funding company a contingent right to potential settlement/judgment proceeds.
- Commercial litigation financier/financing: third‑party funding for commercial claims or law‑firm-related interests; separate definitions and exemptions apply.
- Charges: all fees, interest, origination/admin charges payable to the funding company beyond the funded amount; explicitly capped at 36% annually.
- Exemptions: include family members, 501(c)(3) nonprofits under certain conditions, contingency-fee attorneys advancing costs per professional rules, health insurance arrangements, and conventional non‑contingent loans from financial institutions.
Primary provisions
- Disclosure requirements: requires specified disclosures in litigation funding transactions (text truncation prevents listing all elements, but bill emphasizes written disclosures of material terms).
- Registration and fees: mandates registration of consumer litigation funding companies with the state and payment of registration fees.
- Duties and responsibilities: establishes obligations for funding companies and for attorneys involved in funded matters (e.g., disclosure obligations and conduct standards).
- Restrictions on sources: defines “foreign country/person/entity of concern” (including OFAC‑listed entities and certain foreign governments) and limits involvement by such entities.
- Enforcement and remedies: authorizes state officers/entities to oversee compliance, promulgate rules, impose civil fines and provide remedies for violations.
Who is affected
- Consumers (individual plaintiffs) who enter litigation funding agreements.
- Consumer litigation funding companies and commercial litigation financiers (registration, compliance costs).
- Attorneys and law firms receiving or arranging funding (disclosure and conduct obligations).
- Courts and state regulators (administration, oversight, rulemaking).
- Potentially foreign investors meeting the bill’s “entity of concern” criteria.
Potential impacts (summary)
- Aims to increase consumer protections and transparency (disclosure, fee cap at 36% APR).
- Imposes regulatory and compliance obligations on funders (registration, fees, risk of fines).
- May restrict funding sources (foreign entities of concern) and change market practices for third‑party funders.
- Could affect access to litigation financing depending on how compliance costs and source restrictions influence funder behavior.
Note: This summary is based on the House Introduced text of HB 5281 (reproduced 11/12/2025). The bill text was partially truncated in the provided excerpt; consult the full bill for complete statutory language, disclosure list, enforcement mechanisms, and rulemaking authority.
Compiled from official sources — confirm details with the bill’s official record.
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