SF 2929

Introduction - 94th Legislature (2025 - 2026)

Posted on 03/25/2025 10:02 a.m.

A bill for an act
relating to insurance; adopting the Consumers in Crisis Protection Act; providing
civil penalties; requiring reports; proposing coding for new law as Minnesota
Statutes, chapters 45B; 48B.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

new text begin [45B.01] SHORT TITLE.
new text end

new text begin This chapter may be cited as the Consumers in Crisis Protection Act.
new text end

Sec. 2.

new text begin [45B.02] DEFINITIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Scope. new text end

new text begin For the purposes of this chapter, the terms defined in this section
have the meanings given.
new text end

new text begin Subd. 2. new text end

new text begin Advertise. new text end

new text begin "Advertise" means publishing or disseminating written, oral,
electronic, or printed communication, or communication by means of recorded telephone
messages or transmitted or broadcast on radio, television, the Internet, or similar
communications media, including audio recordings, film strips, motion pictures, and videos,
that are directly or indirectly published, disseminated, circulated or placed before the public
to induce a consumer to enter into a consumer litigation funding.
new text end

new text begin Subd. 3. new text end

new text begin Charges. new text end

new text begin "Charges" means the amount of money to be paid to the consumer
litigation funding company by or on behalf of the consumer that is above the funded amount
provided by or on behalf of the company to a consumer under this chapter. Charges includes
administrative, origination, underwriting, or other fees, including interest, no matter how
denominated.
new text end

new text begin Subd. 4. new text end

new text begin Commercial litigation financier. new text end

new text begin "Commercial litigation financier" means a
person that enters into or offers to enter into a commercial litigation financing agreement
with a plaintiff or with lawyers or law firms asserting legal claims on behalf of the plaintiff
in a civil proceeding. Commercial litigation financier does not include a nonprofit
organization exempt from federal income tax under section 501(c)(3) of the United States
Internal Revenue Code.
new text end

new text begin Subd. 5. new text end

new text begin Commercial litigation financing agreement. new text end

new text begin (a) "Commercial litigation
financing agreement" means, with respect to a civil action or group of civil actions, a written
agreement:
new text end

new text begin (1) in which a third party agrees to provide money to one of the named parties or a law
firm affiliated with the action or group of civil actions; and
new text end

new text begin (2) that creates a direct or collateralized interest in the proceeds of a civil action or group
of civil actions by settlement, verdict, judgment, or otherwise, and whose interest is based
in whole or part on a funding-based obligation to the action or group of actions the appearing
counsel, any contractual co-counsel, or the counsel or co-counsel's law firm, executed with:
new text end

new text begin (i) an attorney representing a party;
new text end

new text begin (ii) co-counsel in the litigation, with a contingent fee interest in the party's representation;
or
new text end

new text begin (iii) a third party who has a collateral-based interest in the counsel or co-counsel's firm's
contingency fees, related in whole or part to the fees derived from the party's representation.
new text end

new text begin (b) Consumer litigation financing agreement includes a contract, including an option,
forward contract, futures contract, short position, swap, or similar contract, or other agreement
that is substantially similar to a consumer litigation financing agreement.
new text end

new text begin (c) Commercial litigation financing agreement does not include a consumer litigation
funding transaction; an agreement between an attorney and a client for the attorney to provide
legal services on a contingency fee basis or to advance the client's legal costs; a health
insurance plan or agreement; a repayment agreement of a financial institution if repayment
is not contingent upon the outcome of the civil proceeding; a funding agreement to a nonprofit
organization that represents a client on a pro bono basis; or an agreement of an assigned
claim to prosecute an environmental contamination matter seeking remediation of, or to
recover the cost of remediating, a site that is or has been on the U.S. Environmental Protection
Agency's Superfund National Priorities List.
new text end

new text begin Subd. 6. new text end

new text begin Consumer. new text end

new text begin "Consumer" means a natural person who resides or is domiciled
in Minnesota or is a plaintiff in a civil action in Minnesota. Consumer includes estate for a
decedent related to a wrongful death claim.
new text end

new text begin Subd. 7. new text end

new text begin Consumer litigation funding. new text end

new text begin "Consumer litigation funding" means a
nonrecourse transaction in which a consumer litigation funding company purchases, with
money paid directly to the consumer, and a consumer assigns to the company a contingent
right to receive an amount of the potential proceeds resulting from a settlement, judgment,
award, or verdict obtained in the consumer's legal claim.
new text end

new text begin Subd. 8. new text end

new text begin Consumer litigation funding company. new text end

new text begin (a) "Consumer litigation funding
company" or "company" means a person or entity that enters into a consumer litigation
funding contract with a value that does not exceed $....... with a consumer.
new text end

new text begin (b) Consumer litigation funding company or company does not include:
new text end

new text begin (1) the consumer's immediate family members;
new text end

new text begin (2) a bank, lender, financing entity, or other special purpose entity:
new text end

new text begin (i) that provides financing to a consumer litigation funding company; or
new text end

new text begin (ii) to which a consumer litigation funding company grants a security interest or transfers
rights or interest in a consumer litigation funding; or
new text end

new text begin (3) an attorney or accountant who provides services to a consumer.
new text end

new text begin Subd. 9. new text end

new text begin Department. new text end

new text begin "Department" means the Department of Commerce.
new text end

new text begin Subd. 10. new text end

new text begin Foreign country or person of concern. new text end

new text begin "Foreign country" or "person of
concern" means:
new text end

new text begin (1) a foreign government or person listed under Code of Federal Regulations, title 15,
part 7.4; or
new text end

new text begin (2) a country the governor designates as a threat to critical infrastructure.
new text end

new text begin Subd. 11. new text end

new text begin Foreign entity of concern. new text end

new text begin (a) "Foreign entity of concern" means a partnership,
association corporation, organization, or other combination of persons:
new text end

new text begin (1) organized or incorporated in a foreign country of concern;
new text end

new text begin (2) owned or controlled by the government, a political subdivision, or a political party
of a foreign country of concern;
new text end

new text begin (3) that has a principal place of business in a foreign country of concern; or
new text end

new text begin (4) that is owned, organized, or controlled by or affiliated with a foreign organization
that has been:
new text end

new text begin (i) placed on the federal Office of Foreign Assets Control's specially designated nationals
and blocked persons list; or
new text end

new text begin (ii) designated by the United States Secretary of State as a foreign terrorist organization.
new text end

new text begin (b) Foreign entity of concern includes an individual that owns, has a controlling interest
in, or is a director or senior officer of an entity identified in paragraph (a).
new text end

new text begin Subd. 12. new text end

new text begin Funded amount. new text end

new text begin "Funded amount" means the amount of money provided to
or on behalf of the consumer in the consumer litigation funding contract. Funded amount
does not include charges.
new text end

new text begin Subd. 13. new text end

new text begin Funding date. new text end

new text begin "Funding date" means the date on which the funded amount
is transferred to the consumer by the consumer litigation funding company by (1) personal
delivery; (2) wire, automated clearing house, or other electronic means; or (3) mail via
insured, certified, or registered United States mail.
new text end

new text begin Subd. 14. new text end

new text begin Immediate family member. new text end

new text begin "Immediate family member" means a (1) parent;
(2) sibling; (3) child by blood, adoption, or marriage; (4) spouse; (5) grandparent; or (6)
grandchild.
new text end

new text begin Subd. 15. new text end

new text begin Legal claim. new text end

new text begin "Legal claim" means a civil claim or cause of action.
new text end

new text begin Subd. 16. new text end

new text begin Resolution date. new text end

new text begin "Resolution date" means the date the funded amount, plus
the agreed-upon charges, are delivered to the consumer litigation funding company by the
consumer, the consumer's attorney, or other means.
new text end

Sec. 3.

new text begin [45B.03] CONTRACT REQUIREMENTS; RIGHT OF RESCISSION.
new text end

new text begin Subdivision 1. new text end

new text begin Contract requirements. new text end

new text begin A consumer litigation funding contract must:
new text end

new text begin (1) be written in a clear and coherent manner using words with common, everyday
meanings that enable an average consumer who makes a reasonable effort under ordinary
circumstances to read and understand the contract's terms without having to obtain
professional assistance;
new text end

new text begin (2) be completely filled in when presented to a consumer for signature;
new text end

new text begin (3) contain, in twelve-point bold type font, a right of rescission that allows the consumer
to cancel the contract without penalty or further obligation if, within ten business days after
the funding date, the consumer returns to the consumer litigation funding company the full
amount of disbursed money;
new text end

new text begin (4) contain the consumer's initials on each page;
new text end

new text begin (5) include a statement that indicates the consumer is not required to pay a fee or charge
other than a fee or charge disclosed on the disclosure form;
new text end

new text begin (6) if the consumer seeks more than one litigation funding contract from the same
company, include a disclosure that provides the cumulative amount due from the consumer
for all transactions, including the charges under all contracts, if repayment is made after the
contracts are executed;
new text end

new text begin (7) include a statement that indicates the maximum amount the consumer is obligated
to pay under the contract other than in a case of material breach, fraud, or misrepresentation
by or on behalf of the consumer; and
new text end

new text begin (8) clearly and conspicuously detail how charges, including applicable fees, are incurred
or accrued.
new text end

new text begin Subd. 2. new text end

new text begin Written acknowledgment. new text end

new text begin The contract must contain a written acknowledgment
signed by the attorney retained by the consumer in the legal claim that attests to the following:
new text end

new text begin (1) the attorney has reviewed the mandatory disclosures under section 45B.06 with the
consumer;
new text end

new text begin (2) the attorney is being paid on a contingency basis pursuant to a written fee agreement;
new text end

new text begin (3) all proceeds of the legal claim must be disbursed via either the attorney's trust account
or a settlement fund established to receive the proceeds of the legal claim on behalf of the
consumer;
new text end

new text begin (4) the attorney is obligated to disburse money from the legal claim and take other steps
to ensure that the terms of the litigation funding contract are fulfilled;
new text end

new text begin (5) the attorney is prohibited from receiving a referral fee or other consideration from
the consumer litigation funding company in connection with the consumer litigation funding;
and
new text end

new text begin (6) the attorney in the legal claim must not provide tax, public or private benefit planning,
or financial advice regarding the consumer litigation funding transaction.
new text end

new text begin Subd. 3. new text end

new text begin Termination. new text end

new text begin If the attorney or firm retained by the consumer in the legal claim
does not provide the consumer with the acknowledgment under subdivision 2, the contract
is null and void. The contract remains valid and enforceable if the consumer terminates the
initial attorney or retains a new attorney with respect to the legal claim.
new text end

new text begin Subd. 4. new text end

new text begin Prepayment penalty prohibited. new text end

new text begin Notwithstanding any law to the contrary, a
prepayment penalty or fee charged or collected on consumer litigation funding is prohibited.
A prepayment penalty on consumer litigation funding is unenforceable.
new text end

Sec. 4.

new text begin [45B.04] PROHIBITIONS; CHARGE LIMITATIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Prohibitions; generally. new text end

new text begin A consumer litigation funding company is
prohibited from:
new text end

new text begin (1) paying or offering to pay a commission, referral fee, or other form of consideration
to: (i) an attorney, law firm, health care provider, chiropractor, or physical therapist; or (ii)
an employee of a person or entity listed under item (i) for referring a consumer to the
company;
new text end

new text begin (2) accepting a commission, referral fee, rebate, or other form of consideration from: (i)
an attorney, law firm, health care provider, chiropractor, or physical therapist; or (ii) an
employee of a person or entity listed under item (i);
new text end

new text begin (3) intentionally advertising materially false or misleading information regarding the
consumer litigation funding company's products or services;
new text end

new text begin (4) referring, in an attempt to secure an initial legal funding, a customer or potential
customer to: (i) a specific attorney, law firm, health care provider, chiropractor, or physical
therapist; or (ii) an employee of a person or entity listed under item (i), except that if a
customer needs legal representation, the company may refer the customer to a local or state
bar association referral service;
new text end

new text begin (5) knowingly providing funding to a consumer who has previously assigned or sold a
portion of the consumer's right to proceeds from the consumer's legal claim without first
making payment to or purchasing a prior unsatisfied consumer litigation funding company's
entire funded amount and contracted charges, unless a lesser amount is otherwise agreed
to in writing by the consumer litigation funding companies. Multiple companies may agree
to contemporaneously provide funding to a consumer if the consumer and the consumer's
attorney consent to the arrangement in writing;
new text end

new text begin (6) having influence, receiving any right to, or making a decision with respect to the
conduct of the underlying legal claim or any settlement or resolution of the underlying legal
claim. The right to make decisions regarding an underlying legal claim remains solely with
the consumer and the attorney involved in the legal claim;
new text end

new text begin (7) attempting to obtain a waiver of any remedy or right by the consumer, including but
not limited to the right to trial by jury; or
new text end

new text begin (8) during or after the resolution of the legal claim, knowingly paying or offering to pay
for court costs, filing fees, or attorney fees using money from the consumer litigation funding
transaction.
new text end

new text begin Subd. 2. new text end

new text begin Other financial prohibitions. new text end

new text begin (a) An attorney or law firm retained by the
consumer in the legal claim must not have a financial interest in the consumer litigation
funding company offering consumer litigation funding to that consumer. An attorney who
has referred the consumer to the attorney's retained attorney must not have a financial interest
in the consumer litigation funding company offering consumer litigation funding to that
consumer.
new text end

new text begin (b) A consumer litigation funding company must not provide funding to a consumer
litigation funding transaction that is directly or indirectly financed by a person or entity
identified under section 45B.02, subdivision 10 or 11.
new text end

new text begin Subd. 3. new text end

new text begin Information disclosure. new text end

new text begin The attorney may disclose privileged information to
the consumer litigation funding company only with the consumer's written consent.
new text end

Sec. 5.

new text begin [45B.05] CONTRACTED AMOUNTS.
new text end

new text begin The contracted amount paid to the consumer litigation funding company (1) must be a
predetermined amount based on intervals of time from the funding date through the resolution
date, and (2) must not be determined as a percentage of the recovery from the legal claim.
new text end

Sec. 6.

new text begin [45B.06] DISCLOSURES.
new text end

new text begin Subdivision 1. new text end

new text begin Consumer litigation financing agreement. new text end

new text begin (a) Except as otherwise
stipulated or ordered by the court, a claimant or the claimant's attorney must, without waiting
for a request, provide to all participants and parties a consumer litigation financing agreement
(1) at the time a legal claim is asserted or commenced, and (2) any time after a legal claim
is asserted or amend that a consumer litigation financing agreement is executed or amended.
An insurer that has or may have a duty to defend or indemnify a party to a legal claim must
be provided the consumer litigation financing agreement or any modifications or amendments
to the agreement.
new text end

new text begin (b) Consumer litigation financing agreements and all participants or parties to consumer
litigation financing agreements are permissible subjects of discovery in a legal claim.
new text end

new text begin Subd. 2. new text end

new text begin Discovery. new text end

new text begin Notwithstanding any agreement or provision with respect to
confidentiality, a consumer litigation funding contract, and all participants or parties to the
consumer litigation funding contract, are presumed to be discoverable in a civil proceeding.
A consumer may seek to rebut the presumption under this subdivision.
new text end

new text begin Subd. 3. new text end

new text begin Certain evidence inadmissible. new text end

new text begin A consumer litigation funding transaction
disclosed under subdivision 1 and a consumer litigation funding contract discovered under
subdivision 2 are presumed to be inadmissible as evidence. A party may seek to rebut the
presumption under this subdivision.
new text end

Sec. 7.

new text begin [45B.07] VIOLATIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Generally. new text end

new text begin A consumer litigation funding company that willfully violates
this chapter in a specific funding case:
new text end

new text begin (1) waives the consumer litigation funding company's right to recover the funded amount
and all charges in the particular case; and
new text end

new text begin (2) is liable for a civil penalty of not more than $....... for each violation, which accrues
to the state and may be recovered in a civil action brought by the attorney general.
new text end

new text begin Subd. 2. new text end

new text begin Attorney general; authority. new text end

new text begin Nothing in this chapter limits or restricts the
attorney general's authority to exercise powers and duties otherwise granted by law.
new text end

Sec. 8.

new text begin [48B.08] ASSIGNABILITY; LIENS.
new text end

new text begin (a) The contingent right to receive an amount of a legal claim's potential proceeds is
assignable by a consumer to a consumer litigation funding company.
new text end

new text begin (b) Only an attorney's lien related to the legal claim that is the subject of the consumer
litigation funding, or Medicare or other statutory liens related to the legal claim, take priority
over a consumer litigation funding company's lien.
new text end

Sec. 9.

new text begin [48B.09] COMMUNICATION; EFFECT ON PRIVILEGES.
new text end

new text begin Communication between a consumer's attorney and a consumer legal funding company
to allow the consumer legal funding company to ascertain the status of a legal claim or a
legal claim's expected value is not discoverable by a person against whom the legal claim
is asserted or filed.
new text end

Sec. 10.

new text begin [48B.10] REGISTRATION.
new text end

new text begin Subdivision 1. new text end

new text begin Registration required. new text end

new text begin (a) A consumer litigation funding company or
commercial litigation financier is prohibited from engaging in consumer litigation funding
or commercial litigation financing agreements in Minnesota unless the consumer litigation
funding company or commercial litigation financier registers under this section.
new text end

new text begin (b) A person or entity is prohibited from filing a form of consumer litigation funding
contract or commercial litigation financing agreement in Minnesota unless the contract or
agreement has been filed with the department in accordance with procedures required by
the department. The procedures must include a reasonable time frame for the state to object
to a filed form.
new text end

new text begin Subd. 2. new text end

new text begin Filing. new text end

new text begin An applicant's registration must be filed in the manner required by the
department and must contain the information the department requires to evaluate the character
and fitness of the applicant company or financier, including but not limited to beneficial
ownership exceeding 20 percent. The initial application must be accompanied by a $.......
fee. A renewal registration must include a $....... fee. A registration must be renewed every
two years and expires December 31 of the second year the registration is valid.
new text end

new text begin Subd. 3. new text end

new text begin Registration issuance. new text end

new text begin The department is prohibited from issuing a registration
certificate unless the department, upon investigation, determines the applicant company's
or financier's, including the applicant company's or financier's officers and directors, character
and fitness warrants the belief that the business is operated honestly, fairly, and consistent
with this chapter's purposes and requirements.
new text end

new text begin Subd. 4. new text end

new text begin Bond. new text end

new text begin If the department requires, a registrant must, at the time an application
is filed under this section, file with the department a bond satisfactory to the department in
an amount not to exceed $........ In lieu of the bond, the registrant may opt to post an
irrevocable letter of credit. The terms of the bond must run concurrent with the period of
time during which the registration is effective. The bond must provide that the registrant
must (1) faithfully conform to and abide by this chapter and administrative rules adopted
by the department under section 48B.14, and (2) pay to a person or persons all amounts of
money due or owed to the state or due or owed to the person or persons under this chapter
during the period for which the bond is given.
new text end

new text begin Subd. 5. new text end

new text begin Hearing. new text end

new text begin (a) Upon written request, the applicant is entitled to a hearing regarding
the applicant's qualifications for registration if:
new text end

new text begin (1) the department notifies the applicant in writing that the application has been denied;
or
new text end

new text begin (2) the department does not issue a registration within 60 days of the date the registration
application is filed.
new text end

new text begin (b) A hearing request must be made within 15 days after the date the department mails
a written notice to the applicant indicating that the application has been denied and stating,
in substance, the department's findings that support denying the application.
new text end

new text begin Subd. 6. new text end

new text begin Applications pending approval; permitted activities. new text end

new text begin Notwithstanding
subdivision 1, a consumer litigation funding company or commercial litigation financier
that registered with the department between the effective date of this chapter or the date
when the department makes applications available to the public, whichever is later, and 180
days after the later of the two dates may engage in consumer litigation funding or commercial
litigation financing agreements while the company's registration is pending approval with
the department.
new text end

Sec. 11.

new text begin [48B.11] REPORTING.
new text end

new text begin Subdivision 1. new text end

new text begin Report required. new text end

new text begin A consumer litigation funding company and commercial
litigation financier that engages in business in Minnesota must submit a report to the
department on or before December 31 each year regarding activities under this chapter. At
a minimum, the report must:
new text end

new text begin (1) specify the number of lawsuits funded by the company or financier during the year;
new text end

new text begin (2) summarizes the funded amounts, in dollars, during the year; and
new text end

new text begin (3) identify the annual percentage charged to each consumer or commercial litigation
funding recipient to whom repayment was made during the year.
new text end

new text begin Subd. 2. new text end

new text begin Certain information public. new text end

new text begin The department must make the information
submitted under subdivision 1 available to the public in a manner that ensures the name of
each company and consumer is confidential. The information must be made available no
later than 30 days after the date the reports are submitted.
new text end

Sec. 12.

new text begin [48B.12] COMMERCIAL LITIGATION FUNDING; PROHIBITIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Agreements. new text end

new text begin A commercial litigation financier is prohibited from directly
or indirectly entering into a commercial litigation financing agreement with a foreign entity
of concern or a foreign country or person of concern.
new text end

new text begin Subd. 2. new text end

new text begin Disclosure. new text end

new text begin A claimant, attorney or law firm representing a claimant, or affiliated
attorney or law firm is prohibited from disclosing or sharing documents or information with
a commercial litigation financier if the information is subject to a protective or sealing order
from a court.
new text end

new text begin Subd. 3. new text end

new text begin Decision making. new text end

new text begin A commercial litigation financier is prohibited from making
a decision, having influence, or directing a decision with respect to the course of a legal
claim, including but not limited to a decision to appoint or change counsel, choose or use
an expert witness, determine litigation strategy, or settle the claim or agree to another
resolution. The right to make all decisions regarding a legal claim remains solely with the
claimant and the claimant's attorney or law firm.
new text end

Sec. 13.

new text begin [48B.13] COMMERCIAL LITIGATION FINANCING AGREEMENT;
DISCLOSURE; DISCOVERY.
new text end

new text begin Subdivision 1. new text end

new text begin Certain disclosure authorized. new text end

new text begin Except as otherwise stipulated or ordered
by the court, a claimant or the claimant's attorney must, without waiting for a discovery
request, provide to all parties a commercial litigation financing agreement (1) at the time a
legal claim is asserted or commenced, and (2) any time after a legal claim is asserted or
commenced that a commercial litigation financing agreement is executed or amended. An
insurer that has or may have a duty to defend or indemnify a party to a legal claim must be
provided with the commercial litigation financing agreement or a modification or amendment
to the agreement.
new text end

new text begin Subd. 2. new text end

new text begin Discovery. new text end

new text begin A commercial litigation financing agreement and all participants
or parties to commercial litigation financing agreements are permissible subjects of discovery
in a legal claim.
new text end

Sec. 14.

new text begin [48B.14] RULEMAKING.
new text end

new text begin The department may adopt rules necessary to implement and enforce this chapter.
new text end