ALBANY, N.Y.—Continuing its legislative victories this year, PIA New York applauds Gov. Kathy Hochul’s signing the Consumer Litigation Funding Act (S.1104-A/A.804-C), which introduces critical regulations to protect consumers from predatory litigation financing.
Litigation financing allows third-party companies to provide cash advances to plaintiffs in exchange for a portion of their future settlement or judgment. While this may seem like a financial lifeline, the reality can be far more troubling. Often, these funding arrangements come with exorbitant, compounding fees, leaving plaintiffs with little to no recovery after legal expenses and financing costs are deducted.
“Without proper oversight, litigation funding companies exploit plaintiffs, drive up settlement costs, and ultimately, increase insurance premiums for businesses and consumers across New York state,” said PIANY President Jason Bartow, AAI, CPIA, TRA. “We are excited that PIANY members’ acts of advocacy have paid off again this legislative session, and we thank Gov. Hochul for her actions to protect businesses and the insurance-buying public.”
This law does not ban litigation financing. Rather it offers reasonable regulations to ensure fairness and transparency. It is designed to curb abuse by setting: fee limitations to prevent excessive charges; clear disclosures so consumers understand the true cost of financing; and the ability to rescind agreements, giving plaintiffs more control over their legal outcomes.
Despite this legislative win, PIANY continues to advocate for language to be added—via chapter amendment—to the law that would require litigation financing agreement to be disclosed to the opposing party as part of the normal discovery process.
###
PIA New York is the premier professional association for independent insurance agents, working to advance the needs of its members and to be a leading voice in the insurance industry. PIANY provides members with the very best education, information, advocacy and business tools possible.