The Governor of Illinois has signed SB 1099, the Consumer Legal Funding Act.
Illinois has now joined the states of Maine, Ohio, Nebraska, Oklahoma, Indiana, Vermont, Tennessee, Nevada, and Utah, which have enacted regulations and laws to allegedly protect the interest of consumers, while indirectly pushing away legal funding companies from financing litigation in those states.
Different politicians and organizations have played a role in the drafting of the Act. The Alliance for Responsible Consumer Legal Funding has assisted Illinois Senator Jackie Collins and Representative Curtis Traver in the drafting and the enactment of the bill.
Similarly, Senator John Collins, Mike Simmons, Mattie Hunterm, Ann Gillespie, Elizabeth Hernandez, and Jay C. Hoffman, have provided additional sponsorship for the enactment of the Act.
The Consumer Legal Funding law prohibits funders from:
- Pay or offer to pay commissions, referral fees, or any other monetary benefits to an attorney, law firm, medical professional, or any of their agents or employees to refer a consumer to the company.
- The law prohibits the companies from accepting any commission, referral fees, rebates, or other forms of consideration from an attorney, law firm, medical professional, or their agents or employees.
- The law prohibits companies from advertising misleading or false information regarding their services and products.
- The Act prevents the funding companies to refer, in furtherance of an initial consumer legal funding, a consumer or potential customer to a specific attorney, law firm, medical professional, or their employees. If any customer needs legal representation, the funding company may refer the customer to a local or state bar association referral service or a legal aid organization.
- The law mandates funding companies to supply a true copy of the executed contract to the attorney for the consumer upon execution in case the consumer of their attorney demands such a copy.
- Knowingly provide funding to a consumer who has previously assigned or sold a portion of the consumer right to proceeds from his or her legal claims without first making payment to or purchasing a prior unsatisfied consumer legal funding company’s entire funded amount and contracted charges, unless a lesser amount is otherwise agreed to in writing by the consumer legal funding companies, except that multiple companies may agree to simultaneously provide funding to a consumer if the consumer and the consumer’s attorney consent to the arrangement in writings.
- The law provides that funding companies have no authority to make significant decisions about the claims; the right to make any decisions regarding settlement or any other important aspect of the claims rests with the consumer and the consumer’s attorney.
- The law provides that the consumer legal funding company is required to set the resolution amount as a predetermined amount and not to be determined as a percentage of the recovery from the legal claim.
- The law also provides a reasonable amount which the funding company can charge from the consumer for the preparation of the documents and other tasks.
Similarly, the Act has mandated litigation funding companies to be registered with Illinois’ Department of Financial and Professional Regulations. During this registration, litigation funding companies have to provide a surety bond and other important details. The registration of the companies says that only legally approved and protected legal funding companies can offer their services to Illinois consumers.