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Who cares
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Sponsors
No co-sponsors yet.
History
- Recommit, enacting clause stricken
- Referred to judiciary
Full text
The text isn't available here yet. Check nysenate.gov.
Sponsor's memo
Title of bill
An act to amend the judiciary law, in relation to the financing of lawsuits
Purpose
This bill relates to the financing of lawsuits.
Summary of provisions
Section 1 amends the judiciary law by adding a new article 15-A, entitled "Financing of a Lawsuit by a Third Party." The financing of a lawsuit by a third party for investment, with the expectation of a return which exceeds the state usury laws, shall be considered champertous and illegal.
It further stipulates that any financing of a lawsuit by a third party shall be considered a loan and therefore subject to the provisions of section 5-501 of the general obligations law and to penalties, where applicable, under article 190 of the penal law relating to criminal usury.
This bill does not apply to contingency fees. Violations will be considered a misdemeanor, carrying a fine of $2,500 per incident.
Section 2 enacts this bill immediately.
Justification
The practice of champerty is a proceeding by which a person, not a party in a lawsuit, bargains to aid in its prosecution or defense for consideration of a share of the settlement. Litigation finance companies have been sprouting up across New York State and have become a burgeoning business nationwide.
Litigation financing companies issue short-term, high interest cash advances to plaintiffs to fund their expenses before a decision has been reached. Contract terms generally stipulate that the financing company will get all or a portion of its loan. Loan amounts may range from $500 to $100,000 at interest rates of 2 to 4% per month.
New York has criminal laws barring the practice of usury, generally considered to be loans with interest rates higher than 16% annually. with interest rates Sky-rocketing over 50%, these financing schemes should be considered usurious loans and not "investments" in the outcome of a case.
Legislative history
New bill.
Fiscal implications
None.
Effective date
This act shall take effect immediately.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.