Louisiana HB 1219: CIVIL/LAW: Establishes regulations on consumer legal funding

Bill Text

HLS 26RS-333 ORIGINAL
2026 Regular Session
HOUSE BILL NO. 1219
BY REPRESENTATIVE VENTRELLA
CIVIL/LAW: Establishes regulations on consumer legal funding
1 AN ACT
2 To enact Chapter 2-E of Code Title XII of Code Book III of Title 9 of the Louisiana Revised
3 Statutes of 1950, to be comprised of R.S. 9:3580.21 through R.S. 9:3580.27, relative
4 to consumer legal funding; to create the "Consumer Legal Funding Act"; to provide
5 legislative purpose; to provide a rule of construction; to provide for definitions; to
6 establish a maximum rate of return in a consumer lawsuit funding transaction; to
7 provide for required disclosures; to prohibit certain practices in consumer lawsuit
8 funding transactions; to provide for exemptions; to provide penalties for violations;
9 to provide for enforcement by the attorney general, and to provide for related
10 matters.
11 Be it enacted by the Legislature of Louisiana:
12 Section 1. Chapter 2-E of Code Title XII of Code Book III of Title 9 of the Louisiana
13 Revised Statutes of 1950, comprised of R.S. 9:3580.21 through R.S. 9:3580.25, is hereby
14 enacted to read as follows:
15 CHAPTER 2-E. CONSUMER LAWSUIT FUNDING ACT
16 §3580.21. Legislative purpose; construction
17 A. The purpose of this Chapter is to do all of the following:
18 (1) Protect consumers who enter into litigation funding transactions from
19 excessive charges, unfair practices, and lack of transparency.
Page 1 of 6
CODING: Words in struck through type are deletions from existing law; words underscored
are additions.

HLS 26RS-333 ORIGINAL
HB NO. 1219
1 (2) Ensure that consumer lawsuit funding transactions are subject to
2 reasonable limits on rates of return consistent with the law of this state governing
3 extensions of credit.
4 (3) Promote full, fair, and conspicuous disclosure of the terms, costs, and
5 effective rates of return so that consumers may make informed financial decisions.
6 (4) Preserve the integrity of the attorney-client relationship and ensure that
7 third-party funding arrangements do not interfere with the control or resolution of
8 legal claims.
9 (5) Prevent the use of litigation funding arrangements to circumvent the
10 usury laws and consumer protection statutes of this state.
11 (6) Prohibit deceptive, misleading, abusive, or unfair practices in connection
12 with consumer lawsuit funding transactions, including practices that obscure the true
13 cost or impact of such transactions on a consumer's recovery.
14 B. This Chapter shall be liberally construed to effectuate its purpose of
15 protecting consumers who engage in lawsuit funding transactions and to ensure
16 transparency and fairness in such agreements.
17 §3580.22. Definitions
18 As used in this Chapter, the following words have the following meanings:
19 (1) "Consumer" means an individual who is or may become a plaintiff,
20 claimant, or adverse party in a dispute, whether in a judicial, administrative, or
21 alternative dispute resolution proceeding.
22 (2) "Consumer lawsuit funder" means any person or entity that engages in
23 consumer lawsuit funding.
24 (3) "Consumer lawsuit funding" means any of the following:
25 (a) Providing money or a thing of value to a consumer in connection with a
26 dispute, the repayment of which is conditioned upon and sourced from all or a
27 portion of the consumer's proceeds from the resolution of the dispute by judgment,
28 settlement, award, or otherwise.
Page 2 of 6
CODING: Words in struck through type are deletions from existing law; words underscored
are additions.

HLS 26RS-333 ORIGINAL
HB NO. 1219
1 (b) Purchasing from a consumer the right to receive all or a portion of the
2 proceeds of that consumer's dispute by judgment, settlement, award, or otherwise.
3 (4) "Dispute" means any of the following:
4 (a) Any civil action pending in a court of this state.
5 (b) Any administrative adjudication or hearing before a state or local
6 government agency.
7 (c) Any arbitration, mediation, or other alternative dispute resolution
8 proceeding pursuant to written agreement of the parties.
9 §3580.23. Maximum lawful rate of return in consumer lawsuit funding
10 A. A consumer lawsuit funder shall not collect from a consumer in a
11 consumer lawsuit funding transaction a percentage rate of return exceeding the
12 maximum conventional interest rate percentage allowable pursuant to R.S. 9:3500.
13 B. Any amount paid or payable to a consumer lawsuit funder under a
14 consumer lawsuit funding transaction that exceeds the amount advanced to, provided
15 to, or purchased from the consumer shall be considered for the purposes of
16 calculating the percentage rate of return for the purposes of this Chapter.
17 §3580.24. Contract requirements and disclosures
18 A. A consumer lawsuit funding agreement shall be in writing, signed by both
19 the consumer and the consumer lawsuit funder, and shall clearly set forth the terms
20 of the transaction, including all of the following:
21 (1) The total amount to be