New YorkA 8042025-2026 Regular SessionHouseWALLET

Relates to consumer litigation funding

Sponsored By: William Magnarelli (Democratic)

Became Law

CONSUMER AFFAIRS AND PROTECTIONCODESWAYS AND MEANSRULES

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Bill Overview

Analyzed Economic Effects

5 provisions identified: 4 benefits, 0 costs, 1 mixed.

Charge caps and repayment rules for funding

Repayment must be a set dollar amount that grows by time from funding to case end. It cannot be a percentage of your recovery. Companies cannot charge any prepayment penalty. If you or your lawyer give an attestation of the final gross proceeds, total charges cannot exceed 25% of those proceeds. Attorney liens and Medicare or other statutory liens are paid before the funder’s claim; other liens follow normal law.

Clear lawsuit funding contracts and 10-day cancel

The law requires clear, fully completed lawsuit funding contracts, and you must initial each page. Contracts must show the funded amount, any one-time charges, the maximum that can be taken, and a payment schedule showing amounts due at each 180-day mark. You can cancel within 10 business days after the funding date, and this right appears in bold type. Your attorney must sign an acknowledgement that they reviewed the disclosures, work on contingency, route proceeds through a trust or settlement fund, and took no referral fees; if not signed, the contract is void. The company must quickly give your lawyer a copy of the signed contract, and talks between your lawyer and the funder are protected by attorney‑client privilege, including work product.

No lawyer kickbacks or case control

Funding companies cannot pay or take referral fees from attorneys or medical providers, and ads cannot be false or misleading. They cannot steer you to a specific lawyer, except through bar referral services. Funders cannot control your case or ask you to waive legal remedies. They cannot use the funding to pay court costs or attorney fees. If there was a prior assignment, that earlier funded amount must be satisfied unless you agree otherwise in writing. Your lawyer and any referring lawyer also cannot have a financial interest in the funder for your case.

Penalties for violations and old deals unchanged

If a funding company willfully breaks the law in your case, it loses the right to collect the funded amount and any charges. The company can also be fined up to $5,000 per violation by the New York Attorney General. The law does not change funding deals made before it took effect.

State registration and oversight for funders

Companies that buy a share of case proceeds must register with the NY Department of State before doing business. Covered funders are those with contracts up to $500,000; family members, certain lenders to funders, and attorneys or accountants providing services are not covered. Registration costs $500 to apply and $200 to renew every two years, and registrations expire on September 30. The Department may require a bond or irrevocable letter of credit up to $50,000. If a company files within 180 days after applications are available, it may operate while registration is pending. Companies must file their contract forms with the state and submit an annual report by January 31; the state publishes summary data within 90 days without naming companies or consumers.

Sponsors & Cosponsors

Sponsor

William Magnarelli
Democratic • House

Cosponsors

Al Taylor
Democratic • House
Albert A. Stirpe
House
Amanda Septimo
Democratic • House
Andrew Hevesi
Democratic • House
Chantel Jackson
Democratic • House
Chris Burdick
Democratic • House
Deborah Glick
Democratic • House
Erik Dilan
Democratic • House
George Alvarez
Democratic • House
Jaime R. Williams
Democratic • House
Jeffrey Dinowitz
Democratic • House
Jessica Gonzalez-Rojas
Democratic • House
Jo Anne Simon
Democratic • House
Judy Griffin
Democratic • House
Karines Reyes
Democratic • House
Latrice Walker
Democratic • House
Marianne Buttenschon
Democratic • House
MaryJane Shimsky
Democratic • House
Nader Sayegh
Democratic • House
Phil Steck
Democratic • House
Vivian Cook
Democratic • House
William Colton
Democratic • House

Roll Call Votes

All Roll Calls

Yes: 62 • No: 0

House vote • 6/9/2025

FLOOR Vote