Senate
File
338
-
Introduced
SENATE
FILE
338
BY
DICKEY
A
BILL
FOR
An
Act
prohibiting
litigation
financing
contracts,
and
1
including
effective
date
and
applicability
provisions.
2
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
3
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S.F.
338
Section
1.
NEW
SECTION
.
537A.7
Litigation
financing
1
contracts
——
void.
2
A
litigation
financing
contract
that
is
a
nonrecourse
3
transaction
in
which
financing
is
provided
to
a
consumer,
4
attorney,
or
law
firm
in
return
for
the
consumer,
attorney,
5
or
law
firm
assigning
a
contingent
right
to
receive
an
amount
6
of
the
potential
proceeds
of
the
consumer’s
judgment
award,
7
settlement,
or
verdict
obtained
with
respect
to
the
consumer’s
8
legal
claim
is
void,
unlawful,
and
unenforceable.
This
9
section
does
not
prohibit
the
provision
of
legal
services
on
10
a
contingency
fee
basis,
or
the
advancement
of
legal
costs,
11
where
such
services
or
costs
are
provided
for
or
on
behalf
of
12
a
consumer
by
an
attorney
representing
the
consumer
in
the
13
dispute
and
in
accordance
with
Iowa
rules
of
professional
14
conduct,
a
commercial
tort
claim
as
defined
in
section
15
554.9102,
or
a
claim
under
chapter
87.
16
Sec.
2.
EFFECTIVE
DATE.
This
Act,
being
deemed
of
immediate
17
importance,
takes
effect
upon
enactment.
18
Sec.
3.
APPLICABILITY.
This
Act
applies
to
litigation
19
financing
contracts
entered
into
on
or
after
the
effective
date
20
of
this
Act.
21
EXPLANATION
22
The
inclusion
of
this
explanation
does
not
constitute
agreement
with
23
the
explanation’s
substance
by
the
members
of
the
general
assembly.
24
This
bill
prohibits
litigation
financing
contracts.
25
Litigation
financing
contracts
are
agreements
between
a
third
26
party
and
a
plaintiff,
an
attorney,
or
a
law
firm
of
a
civil
27
action
in
which
the
third
party
provides
funding
for
legal
28
expenses
in
exchange
for
a
percentage
of
any
settlement
or
29
judgment.
The
bill
does
not
prohibit
the
provision
of
legal
30
services
on
a
contingency
fee
basis,
or
the
advancement
of
31
legal
costs,
where
such
services
or
costs
are
provided
for
32
or
on
behalf
of
a
consumer
by
an
attorney
representing
the
33
consumer
in
the
dispute
and
in
accordance
with
Iowa
rules
of
34
professional
conduct,
a
commercial
tort
claim,
or
a
claim
under
35
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338
Code
chapter
87
(workers’
compensation).
1
The
bill
takes
effect
upon
enactment
and
applies
to
2
litigation
financing
contracts
entered
into
on
or
after
the
3
effective
date
of
the
bill.
4
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