SF 53 (LSB 1643SS (1) 91)

SENATE FILE 53

BY  DICKEY

A BILL FOR

An Act prohibiting litigation financing contracts, and including effective date and applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  NEW SECTION.  537A.7  Litigation financing contracts —— void.
   A litigation financing contract that is a nonrecourse transaction in which financing is provided to a consumer, attorney, or law firm in return for the consumer, attorney, or law firm assigning a contingent right to receive an amount of the potential proceeds of the consumer’s judgment award, settlement, or verdict obtained with respect to the consumer’s legal claim is void, unlawful, and unenforceable. This section does not prohibit the provision of legal services on a contingency fee basis, or the advancement of legal costs, where such services or costs are provided for or on behalf of a consumer by an attorney representing the consumer in the dispute and in accordance with Iowa rules of professional conduct, a commercial tort claim as defined in section 554.9102, or a claim under chapter 87.
    Sec. 2.  EFFECTIVE DATE.  This Act, being deemed of immediate importance, takes effect upon enactment.
    Sec. 3.  APPLICABILITY.  This Act applies to litigation financing contracts entered into on or after the effective date of this Act.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill prohibits litigation financing contracts. Litigation financing contracts are agreements between a third party and a plaintiff, an attorney, or a law firm of a civil action in which the third party provides funding for legal expenses in exchange for a percentage of any settlement or judgment. The bill does not prohibit the provision of legal services on a contingency fee basis, or the advancement of legal costs, where such services or costs are provided for or on behalf of a consumer by an attorney representing the consumer in the dispute and in accordance with Iowa rules of professional conduct, a commercial tort claim, or a claim under Code chapter 87 (workers’ compensation).
   The bill takes effect upon enactment and applies to litigation financing contracts entered into on or after the effective date of the bill.