Purpose of the Bill

The purpose of this bill is to regulate consumer and commercial litigation funding in Minnesota by introducing the "Consumers in Crisis Protection Act." It aims to protect consumers involved in legal claims from potentially predatory financial practices by litigation funding companies. The bill establishes guidelines for contracts, disclosures, prohibitions, and enforcement related to litigation funding.

Main Provisions

• Consumer Litigation Financing Agreements: The bill defines a "consumer litigation financing agreement" as a contract where a consumer receives funds from a company in exchange for a portion of any potential legal settlements or awards.
• Contract Requirements: Contracts must be clear, have a right of rescission that allows consumers to cancel within ten business days, and must not include prepayment penalties.
• Prohibitions on Practices: Companies are banned from offering referral fees to attorneys or influencing legal claims. They are also restricted from entering agreements with foreign entities of concern.
• Charge Limitations: Charges should not be based on a percentage of the recovery from the legal claim.
• Consumer and Commercial Reporting: Companies must submit annual reports summarizing their activities, including the number of lawsuits funded and the charges imposed.
• Registration Requirement: Litigation funding companies must register with the state. Registrants must verify their integrity and provide a bond if necessary.
• Enforcement and Violations: Companies violating the act may lose the right to recover funds and may face civil penalties.

Significant Changes to Existing Law

• New Chapter Creation: Introduces new regulations coding for Minnesota statutes chapters 45B and 48B specifically addressing litigation financing.
• Consumer Protection Enhancements: Offers new safeguards for consumers involved in litigation funding, ensuring transparency and fairness.

Relevant Terms

consumer litigation funding, commercial litigation financing, Consumers in Crisis Protection Act, consumer protection, legal claim, registration, reporting, disclosure, litigation funding company, foreign entity of concern.