Purpose of the Bill

The bill aims to regulate consumer and commercial litigation funding in Minnesota. It introduces the Consumers in Crisis Protection Act, which establishes guidelines for contracts, advertising, and practices of litigation funding companies to protect consumers and ensure fair business operations.

Main Provisions

• Consumer Litigation Funding Contracts: Outlines requirements for such contracts, ensuring they are clear and understandable for consumers without professional help. Contracts must include a rescission period and provide comprehensive information about fees and charges.

• Prohibitions and Charge Limitations: Bans certain practices by litigation funding companies, such as paying referral fees to lawyers or misleading consumers. It sets charge caps and prohibits prepayment penalties.

• Registration and Reporting: Requires litigation funding companies to register with the Minnesota Department of Commerce and report annually on their activities. The reports must include the number of lawsuits funded, amounts funded, and annual percentage charges.

• Enforcement and Penalties: Non-compliance with the act can lead to civil penalties and forfeiting rights to recover amounts owed under funding agreements. The Attorney General has the authority to enforce compliance.

• Assignment and Lien Priorities: Clarifies that consumer rights to legal claim proceeds can be assigned to funding companies, with some liens taking precedence.

• Communications and Confidentiality: Protects certain communications between attorneys and funding companies from discovery by opponents in litigation, with some exceptions for transparency.

Significant Changes to Existing Law

• Establishes a new chapter in Minnesota Statutes to codify the regulation of litigation funding.
• Introduces specific prohibitions on interactions between litigation funding entities and legal services providers to prevent conflicts of interest.

Relevant Terms

• Consumer litigation funding
• Commercial litigation financier
• Litigation financing agreement
• Registration requirements
• Civil penalties
• Attorney-client communication
• Discovery and disclosure

These terms and provisions aim to create a balanced framework that protects consumers while allowing legitimate litigation funding activities to continue under clear regulatory oversight.