New York Legislature passes PIANY-priority consumer protection bill 

June 12, 2025

The New York state Legislature passed S.1104A/A.804-C, sponsored by Sen. Jeremy Cooney, D-56, Assemblyman Bill Magnarelli, D-129, respectively—the Consumer Litigation Funding Act. The legislation, a PIANY-priority, marks the latest in a string of wins PIANY as it continues to advocate for fair, consumer-focused reform in Albany. 

This long-overdue measure introduces critical regulations for third-party litigation financing companies, which would protect vulnerable plaintiffs and bring much-needed transparency and accountability to an unregulated litigation sector. 

PIANY’s advocacy leads the charge 

From the outset of the 2025 legislative session, PIANY leadership identified consumer litigation funding reform as a top legislative priority. Recognizing the escalating impact of predatory funding practices on both consumers and insurance markets, PIANY actively championed S.1104-A/A.804-C, engaging with lawmakers, delivering expert testimony and rallying member support to drive the bill forward. 

Why legislation is needed 

Litigation funding companies offer nonrecourse cash advances to plaintiffs in exchange for a portion of future settlements or judgments. While marketed as a lifeline for cash-strapped litigants, these arrangements often conceal exorbitant fees, lack transparency and offer predatory contract terms. 

Because these transactions are classified as investments—not loans—they escape the protections of New York state’s usury laws. The result? Plaintiffs can walk away from a successful legal outcome with little to no recovery after excessive financing costs are deducted. 

The damage doesn’t stop there. Frequently, these financing arrangements encourage inflated settlement demands and prolonged legal battles, placing added strain on insurers, courts and defendants. The end result: higher premiums for businesses, homeowners and drivers across the state. 

What this act would do 

The legislation would take a balanced approach—regulating, not banning, litigation financing to ensure fairness while preserving access to capital for those in need. 

Key provisions include: 

Fee limitations. Fees would be capped at 25% of the gross recovery from a legal claim for the total charges—ensuring funding costs remain proportional. 

Clear contract disclosures. Contracts would need to outline the funded amount, all associated charges, and repayment terms in bold, easy-to-understand language. 

Right to rescind. Plaintiffs would be able to cancel a contract within 10 business days of receiving funds with no penalty. 

Licensing and oversight. Companies would have to register with the state, undergo fitness reviews, and report annual activity to the Department of State. 

Attorney safeguards. Attorneys would be prohibited from having financial interests in funding companies or receiving kickbacks for referrals. 

These protections would rein in the worst abuses while allowing legitimate, regulated providers to operate responsibly. 

Your association at work 

The passage of this legislation reflects the power of PIANY’s sustained, issue-driven advocacy, which continues to yield results for independent agents and their clients. This success follows recent legislative victories on important consumer issues in auto insurance, home insurance and property—further strengthening PIANY’s reputation as a force for balanced, consumer-oriented insurance policy in the state. 

A victory for insurance affordability 

Unchecked litigation funding has quietly driven up claim costs and settlement values, which ultimately leads insurers to raise rates for all policyholders. By bringing this industry out of the shadows, the Consumer Litigation Funding Act would help contain runaway legal expenses, stabilize the insurance market and reduce pressure on premiums. 

Next steps 

The legislation now will go to Gov. Kathy Hochul for her consideration. If signed, the act would take effect 180 days after signing, giving companies time to comply with its licensing, disclosure and reporting requirements. Importantly, the law will not retroactively affect funding contracts entered before the effective date. 

As this legislation heads to the governor’s desk, PIANY remains actively engaged, urging swift signature and preparing to support regulatory implementation.  

Bradford J. Lachut, Esq.
PIA Northeast |  + posts

Bradford J. Lachut, Esq., joined PIA as government affairs counsel for the Government & Industry Affairs Department in 2012 and then, after a four-month leave, he returned to the association in 2018 as director of government & industry affairs responsible for all legal, government relations and insurance industry liaison programs for the five state associations. Prior to PIA, Brad worked as an attorney for Steven J. Baum PC, in Amherst, and as an associate attorney for the law office of James Morris in Buffalo. He also spent time serving as senior manager of government affairs as the Buffalo Niagara Partnership, a chamber of commerce serving the Buffalo, N.Y., region, his hometown. He received his juris doctorate from Buffalo Law School and his Bachelor of Science degree in Government and Politics from Utica College, Utica, N.Y. Brad is an active Mason and Shriner.

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