Section 436.556

Title XXVIII CONTRACTS AND CONTRACTUAL RELATIONS

Chapter 436

Effective - 28 Aug 2023   

  436.556.  Prohibited acts. — No consumer legal funding company shall:

  (1)  Pay or offer to pay commissions, referral fees, or other forms of consideration to any attorney, law firm, medical provider, chiropractor, or physical therapist or any of their employees for referring a consumer to the company;

  (2)  Accept any commissions, referral fees, rebates, or other forms of consideration from an attorney, law firm, medical provider, chiropractor, or physical therapist or any of their employees;

  (3)  Intentionally advertise materially false or misleading information regarding its products or services;

  (4)  Refer, in furtherance of an initial legal funding, a customer or potential customer to a specific attorney, law firm, medical provider, chiropractor, or physical therapist or any of their employees.  However, the company may refer the customer to a local or state bar association referral service if a customer needs legal representation;

  (5)  Fail to promptly supply a copy of the executed contract to the consumer's attorney;

  (6)  Knowingly provide funding to a consumer who has previously assigned or sold a portion of the right to proceeds from the consumer's legal claim unless the consumer legal funding company pays or purchases the entire unsatisfied funded amount and contracted charges from the prior consumer legal funding company or the two companies agree to a lesser amount in writing.  However, multiple companies may agree to contemporaneously provide funding to a consumer, provided that the consumer and the consumer's attorney consent to the arrangement in writing;

  (7)  Receive any right to or make any decisions with respect to the conduct of the underlying legal claim or any settlement or resolution thereof.  The right to make such decisions shall remain solely with the consumer and the attorney in the legal claim;

  (8)  Knowingly pay or offer to pay for court costs, filing fees, or attorney's fees either during or after the resolution of the legal claim by using funds from the consumer legal funding contract.  The consumer legal funding contract shall include a provision advising the consumer that the funding shall not be used for such costs or fees; or

  (9)  Sell a consumer litigation funding contract in whole or in part to a third party.  However, if the consumer legal funding company retains responsibility for collecting payment, administering, and otherwise enforcing the consumer legal funding contract, the provisions of this subdivision shall not apply to any of the following:

  (a)  An assignment to a wholly owned subsidiary of the consumer legal funding company;

  (b)  An assignment to an affiliate of the consumer legal funding company that is under common control;

  (c)  The granting of a security interest under Article 9 of the Uniform Commercial Code, or as otherwise permitted by law.

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(L. 2023 S.B. 103)