Bill
H 4521
Regulates consumer legal funding with clear disclosures, a 10-day rescission, and repayment only from claim proceeds, protecting consumers from hidden fees.
Note on source material
- The provided document appears to combine two different bills: (1) a short Massachusetts House bill establishing a sick‑leave bank for a named state employee (Kathleen Rodrigue), and (2) a longer South Carolina bill titled the "South Carolina Transparency in Consumer Legal Funding Act" that would add Chapter 31 to Title 37. This summary focuses on the Transparency in Consumer Legal Funding Act (the longer text), since that aligns with the bill title and substantive content provided. The summary is limited to the provisions included in the supplied excerpts.
Purpose and intent
- To create state regulation and strong consumer‑protection requirements for “consumer legal funding” transactions (third‑party, nonrecourse advances to litigants). The act promotes transparency in contracts and disclosures, establishes definitional rules, and limits company conduct so consumers better understand obligations and risks.
Key definitions (selected)
- “Consumer legal funding”: a nonrecourse transaction in which a funding company purchases/receives a contingent right to a portion of a consumer’s potential recovery (settlement or judgment).
- “Charges”: any amount to be paid to the company above the funded amount, including fees, origination, underwriting, interest, however denominated.
- “Funded amount”: monies advanced to the consumer, excluding charges.
- “Funding date” and “Resolution date”: dates when funds are delivered and when the funded amount plus agreed charges are delivered to the company, respectively.
- Exclusions for “company” include immediate family members, banks providing financing to a company, and attorneys/accountants providing services.
Core contract requirements and disclosures
- Contracts must be written plainly (everyday language), fully completed when presented, and include the consumer’s initials on each page.
- A conspicuous 10‑business‑day rescission right: consumer may cancel without penalty if, within 10 business days after the funding date, they return the full disbursed funds.
- All material terms must be disclosed in at least 12‑point font and placed conspicuously. Required front‑page disclosures include:
- Funded amount;
- Itemized one‑time charges;
- Maximum total amount that may be assigned to the company (funded amount + all charges);
- A payment schedule listing amounts due at the end of each six‑month period from funding until the maximum is paid.
- A boxed, 12‑point bold, all‑caps statement: repayment (funded amount + charges) shall be paid only from proceeds of the legal claim and only to the extent proceeds are available; consumer will owe nothing if there is no recovery unless the consumer committed fraud or materially breached the contract.
- For consumers whose primary language is not English, contracts must be translated into the consumer’s native language upon written request.
Limits on company involvement and consumer protections
- The company may not interfere with the attorney’s independent professional judgment regarding settlement; companies may request status updates and must be notified of settlement/adjudication outcomes prior to the resolution date.
- The contract must clearly explain how charges accrue and the maximum consumer obligation (except in cases of fraud or material breach).
Who is affected
- Consumers (individuals or estates in wrongful‑death cases) seeking third‑party litigation financing.
- Consumer legal funding companies and their financing partners.
- Attorneys representing funded consumers (limited notification role; protected from interference).
Anticipated impacts
- Increased transparency and standardization of legal funding contracts.
- Greater consumer protections: clear disclosure of fees, rescission right, protection from liability if no recovery (subject to fraud/material breach).
- Compliance costs for funding companies (formatting, disclosure, translation, recordkeeping); possible effects on pricing/availability of advances.
- Likely enforcement/penalty provisions and registration requirements are referenced in the bill summary header but were not included in the truncated text provided.
Procedural / timeline notes (as provided)
- Introduced: 05/06/2025 (read first time; referred to Committee on Judiciary).
- Subsequent listed actions include committee reports, readings, amendments, emergency preamble adoption, enactment, and a Governor’s signature dated 2025‑11‑06 (Chapter 53 of the Acts of 2025). Because the source mixes jurisdictions and bills, these procedural entries should be confirmed against the legislature’s official docket for the relevant state.
Recommendation
- Verify the correct jurisdiction and full bill text (complete Chapter 31 language and any registration, enforcement, and penalty sections) before relying on this summary for legal or policy decisions.
Compiled from official sources — confirm details with the bill’s official record.
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