ARIZONA HOUSE OF REPRESENTATIVES Fifty-seventh Legislature First Regular Session
	Senate: JUDE W/D | RAGE DPA 4-2-1-0 | 3^rd Read 27-1-0-2 House: JUD DPA 8-0-0-1 | 3^rd Read 59-0-0-1 Final Read: 30-0-0-0 | Chapter: 226

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SB 1215: litigation; financing; consumer protection; enforcement

Sponsor: Senator Leach, LD 17

Signed by the Governor

Overview

Establishes regulations on third-party litigation financing and financiers.

History

According to the American Bar Association, litigation finance is the practice of an unrelated third party providing capital to a plaintiff to fund litigation in return for a portion of any monetary recovery.

The Arizona Consumer Fraud Act, which is codified in A.R.S. Title 44 Chapter 10, Article 7, relates generally to elimination and remedying of unlawful practices in merchant-consumer transactions. Under A.R.S. § 44-1522, the use by any person of any deceptive or unfair practice, fraud, false pretense, false promise or misrepresentation — or concealment, suppression or omission of any material fact with intent that others rely on such — in connection with the sale or advertisement of any merchandise, whether or not any person has in fact been misled, is declared to be an unlawful practice. The Arizona Attorney General is authorized to take certain actions to investigate and enforce violations of this provision (A.R.S. §§ 44-1524 through 44-1534).

Provisions

1. Establishes that a litigation financier may not control or influence litigation decisions, including strategy, counsel selection or settlement. (Sec. 1)

2. Mandates that, if there has been a prior disclosure of a litigation financing agreement, courts in class action and multidistrict litigation consider the existence of the litigation financing and any potential conflicts of interest when evaluating representation or leadership appointments. (Sec. 1)

3. Prohibits litigation financiers from paying referral fees or similar compensation to attorneys, law firms or licensed health care providers without disclosing such. (Sec. 1)

4. Prohibits litigation financiers from providing funding, in connection with a litigation financing agreement, that is financed directly or indirectly by a foreign entity of concern. (Sec. 1)

5. Asserts that the prohibitions, on undisclosed referral fees and funding from foreign entities of concern, apply in class actions and multidistrict litigation. (Sec. 1)

6. Provides that a litigation financing agreement entered into in violation of this Act is voidable. (Sec. 1)

7. Establishes that a litigation financier knowingly influencing litigation decisions or paying referral fees constitutes an unlawful practice under The Arizona Consumer Fraud Act. (Sec. 1)

8. Specifies that only the attorney general or parties to the litigation may challenge a litigation financing agreement as unlawful under this Act. (Sec. 1)

9. Applies to any civil action, administrative proceeding, claim or cause of action that is commenced on or after the effective date of this Act. (Sec. 2)

10. Contains a delayed effective date of January 1, 2026. (Sec. 3)

11. Defines pertinent terms. (Sec. 1)

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                        SB 1215

Initials NM    Page 0 Signed by the Governor

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