85R2113 GRM-F     By: Hernandez H.B. No. 584       A BILL TO BE ENTITLED   AN ACT   relating to litigation financing transactions.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Subtitle B, Title 4, Finance Code, is amended by   adding Chapter 354 to read as follows:   CHAPTER 354. LITIGATION FINANCING AGREEMENTS   SUBCHAPTER A. GENERAL PROVISIONS          Sec. 354.001.  DEFINITIONS. In this chapter:                (1)  "Charge" or "charges" means the amount paid to a   litigation financing company by or on behalf of the consumer that is   in addition to the funded amount provided by or on behalf of the   company to a consumer.                (2)  "Consumer" means an individual who has a pending   legal claim and who:                      (A)  resides in this state; or                      (B)  has the legal claim in this state.                (3)  "Funded amount" means the amount provided to or on   behalf of the consumer under a litigation financing agreement. The   term does not include a charge.                (4)  "Funding date" means the date on which the   litigation financing company transfers or otherwise delivers the   funded amount to the consumer.                (5)  "Immediate family member" means:                      (A)  a parent, sibling, spouse, grandparent, or   grandchild of an individual; or                      (B)  a child related by blood, adoption, or   marriage to an individual.                (6)  "Legal claim" includes:                      (A)  a civil action;                      (B)  an alternative dispute resolution   proceeding; or                      (C)  an administrative proceeding before an   agency of this state.                (7)  "Litigation financing agreement" means an   agreement under which:                      (A)  money is provided to or on behalf of a   consumer by a litigation financing company for a purpose other than   prosecuting the consumer's legal claim; and                      (B)  the repayment of the money is in accordance   with a litigation financing transaction the terms of which are   included as part of the litigation financing agreement.                (8)  "Litigation financing company" or "company" means   a person that enters into a litigation financing agreement with a   consumer.                (9)  "Litigation financing transaction" means a   non-recourse transaction in which a litigation financing company   purchases, and a consumer assigns to the company, a contingent   right to receive an amount of the potential proceeds of a   settlement, judgment, award, or verdict obtained in the consumer's   legal claim.          Sec. 354.002.  NONAPPLICABILITY OF CHAPTER. Except as   specifically provided by this chapter, this chapter does not apply   to the following persons who enter into a litigation financing   agreement with a consumer:                (1)  an immediate family member of the consumer;                (2)  an accountant who provides accounting services to   the consumer; or                (3)  an attorney who, at the time money is provided to   or on behalf of a consumer under a litigation financing agreement,   has an attorney-client relationship with the consumer concerning   the consumer's legal claim.   SUBCHAPTER B. AGREEMENT REQUIREMENTS          Sec. 354.051.  FORM OF AGREEMENT.  A litigation financing   agreement must:                (1)  be in writing;                (2)  contain the initials of the consumer on each page;   and                (3)  be otherwise complete when presented to the   consumer for signature.          Sec. 354.052.  DISCLOSURES.  On the front page of the   agreement under appropriate headings, the agreement must disclose:                (1)  the funded amount to be paid to the consumer by the   litigation financing company;                (2)  an itemization of one-time charges;                (3)  the total amount to be assigned by the consumer to   the company, including the funded amount and all charges; and                (4)  a payment schedule that:                      (A)  includes the funded amount and charges; and                      (B)  lists all dates and the amount due at the end   of each 180-day period from the funding date until the due date of   the maximum amount due to the company by the consumer to satisfy the   amount owed under the agreement.          SECTION 2.  The changes in law made by this Act apply only to   a litigation financing agreement entered into on or after the   effective date of this Act.  A litigation financing agreement   entered into before the effective date of this Act is governed by   the law in effect on the date the agreement was entered into, and   the former law is continued in effect for that purpose.          SECTION 3.  This Act takes effect September 1, 2017.