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Senate File 2085 - IntroducedA Bill ForAn Act 1prohibiting litigation financing contracts.
2BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. NEW SECTION. 537A.7 Litigation financing
2contracts — void.
3A litigation financing contract that is a nonrecourse
4transaction in which financing is provided to a consumer,
5attorney, or law firm in return for the consumer, attorney,
6or law firm assigning a contingent right to receive an amount
7of the potential proceeds of the consumer’s judgment award,
8settlement, or verdict obtained with respect to the consumer’s
9legal claim is void, unlawful, and unenforceable. This
10section does not prohibit the provision of legal services on
11a contingency fee basis, or the advancement of legal costs,
12where such services or costs are provided on or on behalf of
13a consumer by an attorney representing the consumer in the
14dispute and in accordance with Iowa rules of professional
15conduct, a commercial tort claim as defined in section
16554.9102, or a claim under chapter 87.
17 Sec. 2. APPLICABILITY. This Act applies to litigation
18financing contracts entered into on or after the effective date
19of this Act.
20EXPLANATION
21The inclusion of this explanation does not constitute agreement with
22the explanation’s substance by the members of the general assembly.
23This bill prohibits litigation financing contracts.
24Litigation financing contracts are agreements between a third
25party and a plaintiff, an attorney, or a law firm of a civil
26action in which the third party provides funding for legal
27expenses in exchange for a percentage of any settlement or
28judgment. The bill does not prohibit the provision of legal
29services on a contingency fee basis, or the advancement of
30legal costs, where such services or costs are provided on
31or on behalf of a consumer by an attorney representing the
32consumer in the dispute and in accordance with Iowa rules of
33professional conduct, a commercial tort claim, or a claim under
34Code chapter 87 (workers’ compensation).
35The bill applies to litigation financing contracts entered
-1-1into on or after the effective date of the bill.
-2-cm/jh
2BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. NEW SECTION. 537A.7 Litigation financing
2contracts — void.
3A litigation financing contract that is a nonrecourse
4transaction in which financing is provided to a consumer,
5attorney, or law firm in return for the consumer, attorney,
6or law firm assigning a contingent right to receive an amount
7of the potential proceeds of the consumer’s judgment award,
8settlement, or verdict obtained with respect to the consumer’s
9legal claim is void, unlawful, and unenforceable. This
10section does not prohibit the provision of legal services on
11a contingency fee basis, or the advancement of legal costs,
12where such services or costs are provided on or on behalf of
13a consumer by an attorney representing the consumer in the
14dispute and in accordance with Iowa rules of professional
15conduct, a commercial tort claim as defined in section
16554.9102, or a claim under chapter 87.
17 Sec. 2. APPLICABILITY. This Act applies to litigation
18financing contracts entered into on or after the effective date
19of this Act.
20EXPLANATION
21The inclusion of this explanation does not constitute agreement with
22the explanation’s substance by the members of the general assembly.
23This bill prohibits litigation financing contracts.
24Litigation financing contracts are agreements between a third
25party and a plaintiff, an attorney, or a law firm of a civil
26action in which the third party provides funding for legal
27expenses in exchange for a percentage of any settlement or
28judgment. The bill does not prohibit the provision of legal
29services on a contingency fee basis, or the advancement of
30legal costs, where such services or costs are provided on
31or on behalf of a consumer by an attorney representing the
32consumer in the dispute and in accordance with Iowa rules of
33professional conduct, a commercial tort claim, or a claim under
34Code chapter 87 (workers’ compensation).
35The bill applies to litigation financing contracts entered
-1-1into on or after the effective date of the bill.
-2-cm/jh