Rep. Lou Lang

Filed: 1/5/2011

 

 


 

 


 
09600SB3322ham002LRB096 17078 CEL 44750 a

1
AMENDMENT TO SENATE BILL 3322

2    AMENDMENT NO. ______. Amend Senate Bill 3322, AS AMENDED,
3by replacing everything after the enacting clause with the
4following:
 
5    "Section 1-1. Short title. This Act may be cited as the
6Non-Recourse Civil Litigation Funding Act.
 
7    Section 1-5. Definitions. In this Act:
8    "Civil litigation funding company" means a person or entity
9that enters into a non-recourse civil litigation funding
10transaction with a consumer. "Civil litigation funding
11company" includes any affiliate or subsidiary of a civil
12litigation funding company; an entity or person who buys a
13whole or partial interest in a non-recourse civil litigation
14funding, acts as an agent to provide a non-recourse civil
15litigation funding from a third party for a fee, or acts as an
16agent for a third party in providing a non-recourse civil

 

 

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1litigation funding for a fee, regardless of whether approval or
2acceptance by the third party is necessary to create a legal
3obligation for the third party; and any other person or entity
4if the Department determines that the person or entity is
5engaged in a transaction that is in substance a disguised
6non-recourse civil litigation funding or a subterfuge for the
7purpose of avoiding this Act. Notwithstanding anything to the
8contrary contained in this Act, a bank, lender, financing
9entity, or any other special purpose entity that provides
10financing to a civil litigation funding company or to which a
11civil litigation funding company grants a security interest or
12transfers any rights or interest in a non-recourse civil
13litigation funding shall not cause the bank, lender, financing
14entity, or special purpose entity to be deemed a civil
15litigation funding company. Notwithstanding anything to the
16contrary contained in this Act, an attorney or accountant who
17provides services to a consumer shall not be deemed a civil
18litigation funding company.
19    "Consumer" means a natural person residing or domiciled in
20Illinois or who elects to enter into a transaction under this
21Act in Illinois, whether it be in-person, over the internet, by
22facsimile, or any other electronic means, and who has a pending
23legal claim and is represented by an attorney at the time he or
24she enters into a contract for non-recourse civil litigation
25funding.
26    "Contract" means a written agreement between a consumer and

 

 

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1a civil litigation funding company that the civil litigation
2funding company agrees to provide non-recourse civil
3litigation funding to the consumer in compliance with Article
42.
5    "Department" means the Illinois Department of Financial
6and Professional Regulation.
7    "Funding amount" means the dollar amount of funds provided
8to the consumer by the non-recourse civil litigation funding
9company subsequent to the execution of the contract as
10consideration for the assignment of or purchase of a contingent
11right to receive a portion of the proceeds of the legal claim.
12    "Funding date" means the date on which the funding amount
13is paid to the consumer by the civil litigation funding
14company.
15    "Legal claim" means a civil or statutory claim or action.
16    "Licensee" means any civil litigation funding company
17licensed in accordance with Article 3.
18    "Non-recourse civil litigation funding" means a
19transaction of any amount in which a civil litigation funding
20company purchases and a consumer assigns to the civil
21litigation funding company the contingent right to receive a
22portion of the potential proceeds of a settlement, judgment,
23award, or verdict obtained in the consumer's legal claim.
24    "Proceeds" means those funds available for payment to the
25civil litigation funding company that are remaining from any
26settlement, verdict, final judgment, insurance payment, or

 

 

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1award obtained in the consumer's legal claim after reductions
2are made under Section 2-15 of this Act.
3    "Resolution date" means the date the funding amount plus
4the agreed upon fees from the legal claim are received by the
5civil litigation funding company.
6    "Secretary" means the Illinois Secretary of Financial and
7Professional Regulation.
 
8
Article 2. Non-Recourse Civil Litigation Funding

 
9    Section 2-5. Contract provisions. All contracts for
10non-recourse civil litigation funding shall be in writing and
11comply with all of the following requirements:
12    (1) The contract shall contain on the front page,
13appropriately headed and in at least 12-point, bold face type,
14a chart that clearly contains the following disclosures:
15        (A) the total funding amount paid to the consumer;
16        (B) an itemization of one-time fees;
17        (C) the total dollar amount of the proceeds assigned by
18    the consumer to the civil litigation funding company, set
19    forth up to 1080 days beginning at the 11th business day
20    after the funding date, then at 31 days after the funding
21    date, 61 days after the funding date, 181 days after the
22    funding date, 361 days after the funding date, and 721 days
23    after the funding date; and
24        (D) a calculation of the annual percentage fee for each

 

 

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1    180-day interval.
2    The Secretary shall prescribe by rule the format of the
3chart that clearly discloses to the consumer all the
4information in this subsection. Until the Secretary makes such
5a rule, each civil litigation funding company must have a chart
6format approved for distribution by the Secretary.
7    No contract for non-recourse civil litigation funding
8shall be enforceable against the consumer unless it complies
9entirely with this subsection.
10    (2) The contract shall provide that the consumer may cancel
11the contract within 10 business days following the consumer's
12receipt of the funding amount, without penalty or further
13obligation. The contract shall contain the following notice
14written in at least 12-point, bold face type:
15    "Consumer's right to cancellation: You may cancel this
16    contract without penalty or further obligation within 10
17    business days after the funding date.".
18    The contract must also specify that in order for the
19cancellation to be effective, the consumer must either return
20to the civil litigation funding company the total amount of the
21funding amount by (a) delivering the civil litigation funding
22company's uncashed check to the civil litigation company's
23offices in person within 10 business days after receipt of the
24funding amount, (b) sending a notice of cancellation via
25registered or certified mail and include in the mailing a
26return of the total amount of funding amount in the form of the

 

 

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1civil litigation funding company's uncashed check within 10
2business days after receipt of the funding amount, or (c)
3sending a registered, certified or cashier's check or money
4order, by insured, registered, or certified United States mail,
5postmarked within 10 business days after receipt of the funding
6amount, to the address specified in the contract for
7cancellation.
8    (3) The contract shall contain all of the following
9statements in at least 12-point, bold face type:
10        "(A) [Insert name of the civil litigation funding
11    company] agrees that it shall have no right to and will not
12    make any decisions with respect to the conduct of the legal
13    claim or any settlement or resolution thereof and that the
14    right to make those decisions remains solely with you and
15    your attorney in the legal claim. [Insert name of the civil
16    litigation funding company] further agrees that it shall
17    have no right to pursue the legal claim on your behalf.
18        (B) [Insert name of the civil litigation funding
19    company] agrees that it shall only accept: (i) an
20    assignment of a contingent right to receive a portion of
21    the potential proceeds; (ii) the contracted return of the
22    funding amount; and (iii) any agreed upon fees. Any agreed
23    upon fees to [insert name of the civil litigation funding
24    company] shall not be determined as a percentage of your
25    recovery from the legal claim but shall be set as a
26    contractually determined amount based upon intervals of

 

 

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1    time from the funding date through the resolution date.
2    [Insert name of the civil litigation funding company] is
3    not accepting an assignment of your legal claim.
4        (C) [Insert name of the civil litigation funding
5    company] agrees that you may make payments on a funding at
6    any time without additional cost or penalty.".
7    (4) All contracts with the consumer must contain the
8following statement, in plain language in a box with 15-point,
9bold face type, in all capitalized letters, stating the
10following:
11    "THE FUNDING AMOUNT AND AGREED UPON FEES SHALL ONLY BE PAID
12    FROM THE PROCEEDS OF YOUR LEGAL CLAIM AND SHALL ONLY BE
13    PAID TO THE EXTENT THAT THERE ARE AVAILABLE PROCEEDS FROM
14    YOUR LEGAL CLAIM. YOU WILL NOT OWE [INSERT NAME OF THE
15    CIVIL LITIGATION FUNDING COMPANY] ANYTHING IF THERE ARE NO
16    PROCEEDS FROM YOUR LEGAL CLAIM.".
17    (5) The contract shall contain the following statement in
18at least 12-point, bold face type located immediately above the
19space where the consumer's signature is required:
20    "Do not sign this Agreement before you read it completely
21    or if it contains any blank spaces. You are entitled to a
22    completely filled-in copy of this Agreement. Before you
23    sign this Agreement you should obtain the advice of an
24    attorney. Depending on the circumstances, you may want to
25    consult a tax, public, or private benefit planning or
26    financial professional. You acknowledge that your attorney

 

 

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1    in the legal claim has provided no tax, public, or private
2    benefit planning regarding this transaction. You further
3    understand and agree that the funds you receive from
4    [insert name of the civil litigation funding company] shall
5    not be used to pay for or applied to the payment of
6    attorney's fees or litigation costs related to your legal
7    claim.".
8    (6) The executed contract shall contain a written
9acknowledgment by the consumer that he or she has reviewed the
10contract in its entirety.
11    (7) The non-recourse civil litigation funding company
12shall provide the consumer's attorney with a written
13notification of the non-recourse civil litigation funding
14provided to the consumer 3 business days before the funding
15date by way of postal mail, courier service, facsimile, e-mail
16return receipt acknowledged, or other means of proof of
17delivery method unless there is a written acknowledgment by the
18attorney representing the consumer in the legal claim as to the
19terms of the contract. Notwithstanding notice of the
20non-recourse civil litigation funding, the consumer's attorney
21is not responsible for paying or ensuring payment of the
22consumer's obligation.
23    (8) The contracted return of the funding amount, plus any
24agreed upon fees assigned to the civil litigation funding
25company on the resolution date shall not be determined as a
26percentage of the recovery from the legal claim but shall be

 

 

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1set as a contractually determined amount based upon intervals
2of time from the funding date through the resolution date.
 
3    Section 2-10. Contracted fee amount. The total dollar
4amount assigned by the consumer to the civil litigation funding
5company shall be limited to the funding amount, plus the
6following:
7        (1) if resolution date occurs any time from the funding
8    date to 10 business days after the funding date, the civil
9    litigation funding company may not collect a fee;
10        (2) if resolution date occurs any time from the 11th
11    business day after the funding date to 30 days after the
12    funding date, the civil litigation funding company may
13    collect a fee not exceeding 0.05 times the funding amount;
14        (3) if resolution date occurs any time from 31 days
15    after the funding date to 60 days after the funding date,
16    the civil litigation funding company may collect a fee not
17    exceeding 0.10 times the funding amount;
18        (4) if resolution date occurs any time from 61 days
19    after the funding date to 180 days after the funding date,
20    the civil litigation funding company may collect a fee not
21    exceeding 0.34 times the funding amount;
22        (5) if resolution date occurs any time from 181 days
23    after the funding date to 360 days after the funding date,
24    the civil litigation funding company may collect a fee not
25    exceeding 0.75 times the funding amount;

 

 

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1        (6) if resolution date occurs any time from 361 days
2    after the funding date to 720 days after the funding date,
3    the civil litigation funding company may collect a fee not
4    exceeding 1.50 times the funding amount; or
5        (7) if resolution date occurs any time from 721 days
6    after the funding date to 1080 days after the funding date,
7    the civil litigation funding company may collect a fee not
8    exceeding 1.80 times the funding amount.
9        (8) No additional fees shall be applied for any period
10    of time beyond 1080 days after the funding date.
11    Except for the fees set forth in this Section and Section
122-12, the civil litigation funding company may not impose on a
13consumer any additional finance charges, interest, fees, or
14charges of any sort for any purpose.
 
15    Section 2-12. Charges permitted.
16    (a) A licensee may charge an acquisition charge not to
17exceed 8% of the amount funded or $100, whichever is less.
18    (b) A licensee may charge an expedited funds delivery
19option charge not to exceed the actual cost of delivery or $20,
20whichever is less. Expedited funds delivery options,
21including, but not limited to, overnight delivery, electronic
22fund transfers, and Automated Clearing House (ACH)
23transactions may be offered to the consumer as a choice of the
24method of the delivery of funds. The fund delivery charge is
25fully earned at the time that each funding transaction is made

 

 

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1and shall not be subject to refund. Details and receipts of
2delivery shall be provided in an invoice to the consumer no
3more than 10 business days after the funding date. A no-charge
4delivery option must be offered to the consumer as a choice.
 
5    Section 2-15. Priorities. Subrogation claims and
6litigation costs, health care providers, employers in worker's
7compensation proceedings, health insurers, employers with
8self-funded health care plans, Medicare, and Public Aid shall
9be satisfied before and take priority over any claim of the
10civil litigation funding company. All other holders of liens,
11security interests, or subrogation claims shall take priority
12over the civil litigation funding company to the extent allowed
13by law.
 
14    Section 2-20. Standards and practices. Each civil
15litigation funding company shall adhere to the following:
16    (1) The civil litigation funding company shall not pay or
17offer to pay any compensation to any attorney, law firm,
18medical provider, chiropractor, physical therapist, or any of
19their employees for referring a consumer to the civil
20litigation funding company. The civil litigation funding
21company agrees not to accept any compensation from any
22attorney, law firm, medical provider, chiropractor, physical
23therapist, or any of their employees, other than the funding
24amount and any agreed upon fees the consumer assigned to the

 

 

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1civil litigation funding company out of the potential proceeds
2of the legal claim. Neither the funding company nor any of its
3affiliates may provide any funding to a lawyer or law firm who
4represents a consumer with an outstanding loan to any of the
5lawyer's or law firm's clients.
6    (2) The civil litigation funding company shall not
7advertise false or intentionally misleading information
8regarding its product or services.
9    (3) The civil litigation funding company shall not
10knowingly provide funding to a consumer who has previously sold
11and assigned an amount of the potential proceeds of his or her
12legal claim to another civil litigation funding company without
13first purchasing that civil litigation funding company's
14entire accrued balance unless otherwise agreed to in writing by
15the consumer and all civil litigation funding companies that
16provided non-recourse civil litigation funding to the
17consumer.
18    (4) The civil litigation funding company shall not offer
19single premium credit life, disability, or unemployment
20insurance that will be financed through a non-recourse civil
21litigation funding transaction.
22    (5) For non-English speaking consumers, the principal
23terms of the contract must be translated in writing into the
24consumer's primary language. The consumer must sign the
25translated document containing the principal terms and initial
26each page and the translator must sign an affirmation

 

 

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1confirming that the principal terms have been presented to the
2consumer in the consumer's primary language and acknowledged by
3the consumer. Principal terms shall include all items that must
4be disclosed by Section 2-5.
5    (6) The civil litigation funding company shall not
6knowingly enter into a non-recourse civil litigation funding
7contract with a consumer where the consumer's legal claim is a
8pending class action lawsuit at the time of the funding. The
9civil litigation funding company may not discuss a consumer's
10choice to join a class action lawsuit other than to confirm
11that a consumer has or has not chosen to join a class action
12lawsuit. Should any legal claim in which a plaintiff has
13received non-recourse civil litigation funding become a class
14action matter, no further funding shall be permitted.
15    (7) An attorney or law firm shall not have a financial
16interest in the civil litigation funding company providing
17non-recourse civil litigation funding to a consumer
18represented by that attorney or law firm.
19    (8) No communication between a consumer's attorney and a
20civil litigation funding company pertaining to a consumer's
21non-recourse civil litigation funding transaction shall limit,
22waive, or abrogate any statutory or common-law privilege,
23including the attorney-client privilege or the work-product
24doctrine.
25    (9) The return of the funding amount to the civil
26litigation funding company, plus any agreed upon fees, shall be

 

 

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1rendered only out of the proceeds, if any, of the realized
2settlement, judgment, award, or verdict the consumer may
3receive from the legal claim. Under no circumstances shall the
4civil litigation funding company have recourse for the funding
5amount beyond the consumer's proceeds from the legal claim.
6    (10) The civil litigation funding company shall have no
7authority to make any decisions with respect to the conduct of
8the litigation of the legal claim or any settlement or
9resolution thereof. The right to make those decisions remains
10solely with the consumer and the consumer's attorney
11representing the consumer in the legal claim. The civil
12litigation funding company shall have no right to pursue the
13legal claim on the consumer's behalf.
14    (11) The civil litigation funding company shall only accept
15an assignment of a contingent right to receive a portion of the
16potential proceeds, rather than an assignment of the legal
17claim. The contracted return of the funding amount, plus any
18agreed upon fees assigned to the civil litigation funding
19company, shall not be determined as a percentage of the total
20recovery from the legal claim, but shall be set as a
21contractually determined amount based upon intervals of time
22from the funding date through the resolution date.
23    (12) Notwithstanding subsection (9) of this Section, the
24civil litigation funding company shall allow the consumer to
25make payments on a funding at any time without additional cost
26or penalty.

 

 

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1    (13) Contact between the civil litigation funding company
2and the consumer shall be subject to the following limitations:
3        (A) Neither a civil litigation funding company, nor any
4    person acting on behalf of a civil litigation funding
5    company, shall contact a consumer prior to the consumer
6    obtaining legal representation and initiating a legal
7    claim.
8        (B) Neither a civil litigation funding company, nor any
9    person acting on behalf of a civil litigation funding
10    company, shall contact the consumer after the funding date
11    in order to influence any decisions with respect to the
12    conduct of the legal claim or any settlement or resolution
13    thereof. Notwithstanding the foregoing, the civil
14    litigation funding company may contact the consumer or the
15    consumer's attorney to obtain the status of the legal claim
16    and may contact the consumer after the funding date to
17    obtain updated attorney contact information.
18        (C) After the resolution date, neither a civil
19    litigation funding company, nor any person acting on behalf
20    of a civil litigation funding company, shall seek to
21    collect additional funds or threaten civil action for any
22    deficiency.
 
23    Section 2-25. Information; reporting and examination.
24    (a) A licensee shall keep and use books, accounts, and
25records that will enable the Secretary to determine if the

 

 

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1licensee is complying with the provisions of this Act and
2maintain any other records as required by the Secretary.
3    (b) A licensee shall collect and maintain information
4annually for a report that shall disclose in detail and under
5appropriate headings:
6        (1) the total number of non-recourse civil litigation
7    fundings made during the previous calendar year;
8        (2) the total number of non-recourse civil litigation
9    fundings outstanding as of December 31st of the preceding
10    calendar year;
11        (3) the minimum, maximum, and average amount of
12    non-recourse civil litigation fundings made during the
13    preceding calendar year;
14        (4) the average annual fee rate of the non-recourse
15    civil litigation fundings made during the preceding year;
16    and
17        (5) the total number of non-recourse civil litigation
18    funding transactions in which the civil litigation funding
19    company received the return of the funding amount, plus any
20    agreed upon fees; the total number of non-recourse civil
21    litigation funding transactions for which the civil
22    litigation funding company received no return of the
23    funding amount or any fees; and the total number of
24    non-recourse civil litigation funding transactions in
25    which the civil litigation funding company received an
26    amount less than the contracted amount.

 

 

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1    The report shall be verified by the oath or affirmation of
2the Chief Executive Officer, Chief Financial Officer, or other
3duly authorized representative of the licensee. The report must
4be filed with the Secretary no later than March 1 of the year
5following the year for which the report discloses the
6information specified in this subsection (b). The Secretary may
7impose a fine of $50 per day upon the licensee for each day
8beyond the filing deadline that the report is not filed.
9    (c) The Department shall have the authority to conduct
10examinations at any time of the books, records, and
11non-recourse civil litigation funding documents of a licensee
12or other company or person doing business without the required
13license. Any licensee being examined must provide to the
14Department convenient and free access at all reasonable hours
15at its office or location to all books, records, non-recourse
16civil litigation funding documents. The officers, directors,
17and agents of the litigation funding company must facilitate
18the examination and aid in the examination so far as it is in
19their power to do so.
 
20    Section 2-30. Applicability.
21    (a) The contingent right to receive a portion of the
22potential proceeds of a legal claim is assignable and valid for
23the purposes of obtaining funding from a licensee under this
24Section.
25    (b) Nothing in this Act shall cause any non-recourse civil

 

 

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1litigation funding transaction conforming to this Act to be
2deemed to be a "loan or investment contract" or subject to the
3restrictions or provisions governing loans or investment
4contracts set forth in the Interest Act, the Consumer
5Installment Loan Act, or other provisions of Illinois law.
 
6
Article 3. Licensure.

 
7    Section 3-1. Licensure requirement.
8    (a) Except as provided in subsection (b), on and after the
9effective date of this Act, a civil litigation funding company
10as defined by Section 1-5 must be licensed by the Department as
11provided in this Article.
12    (b) A civil litigation funding company licensed on the
13effective date of this Act under the Consumer Installment Loan
14Act need not comply with subsection (a) until the Department
15takes action on the civil litigation funding company's
16application for a non-recourse civil litigation funding
17license. The application must be submitted to the Department
18within 3 months after the effective date of this Act. If the
19application is not submitted within 3 months after the
20effective date of this Act, the civil litigation funding
21company is subject to subsection (a).
 
22    Section 3-5. Licensure.
23    (a) An application for a license shall be in writing and in

 

 

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1a form prescribed by the Secretary. Applicants must also submit
2a non-refundable application fee of $1,500, due at the time of
3the application. The Secretary may not issue a non-recourse
4civil litigation funding license unless and until the following
5findings are made:
6        (1) that the financial responsibility, experience,
7    character, and general fitness of the applicant are such as
8    to command the confidence of the public and to warrant the
9    belief that the business will be operated lawfully and
10    fairly and within the provisions and purpose of this Act;
11    and
12        (2) that the applicant has submitted such other
13    information as the Secretary may deem necessary.
14    (b) A license shall be issued for no longer than one year
15and no renewal of a license may be provided if a licensee has
16substantially violated this Act and has not cured the violation
17to the satisfaction of the Department.
18    (c) A licensee shall appoint, in writing, the Secretary as
19attorney-in-fact upon whom all lawful process against the
20licensee may be served with the same legal force and validity
21as if served on the licensee. A copy of the written
22appointment, duly certified, shall be filed in the office of
23the Secretary, and a copy thereof certified by the Secretary
24shall be sufficient evidence to subject a licensee to
25jurisdiction in a court of law. This appointment shall remain
26in effect while any liability remains outstanding in this State

 

 

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1against the licensee. When summons is served upon the Secretary
2as attorney-in-fact for a licensee, the Secretary shall
3immediately notify the licensee by registered mail, enclosing
4the summons and specifying the day of service.
5    (d) A licensee must pay an annual fee of $1,000. In
6addition to the annual license fee, the reasonable expense of
7any examination or hearing by the Secretary under any
8provisions of this Act shall be borne by the licensee. If a
9licensee fails to submit an application for renewal by December
1031st of the then current year, its license shall automatically
11expire; however, the Secretary, in his or her discretion, may
12reinstate an expired license upon:
13        (1) payment of the annual fee within 30 days of the
14    date of expiration; and
15        (2) proof of good cause for failure to renew.
16    (e) No licensee shall conduct the business of providing
17non-recourse civil litigation funding under this Act within any
18office, suite, room, or place of business in which any consumer
19lending business to consumers residing and domiciled in
20Illinois and is solicited or engaged in within the State of
21Illinois unless the other business is licensed by the
22Department or, in the opinion of the Secretary, operating the
23other business would not be contrary to the best interests of
24consumers and is authorized by the Secretary in writing.
25    (f) The Secretary shall maintain a list of licensees that
26shall be available to interested consumers and lenders and the

 

 

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1public. The Secretary shall maintain a toll-free number whereby
2consumers may obtain information about licensees. The
3Secretary shall also establish a complaint process under which
4an aggrieved consumer may file a complaint against a licensee
5or non-licensee who violates any provision of this Act.
 
6    Section 3-10. Closing of business; surrender of license. At
7least 10 days before a licensee ceases operations, closes the
8business, or files for bankruptcy, the licensee shall:
9    (1) Notify the Department of its intended action in
10writing.
11    (2) With the exception of filing for bankruptcy, surrender
12its license to the Secretary for cancellation. The surrender of
13the license shall not affect the licensee's civil or criminal
14liability for acts committed before or after the surrender or
15entitle the licensee to a return of any part of the annual
16license fee.
17    (3) Notify the Department of the location where the books,
18accounts, contracts, and records will be maintained.
19    The accounts, books, records, and contracts shall be
20maintained and serviced by the licensee, by another licensee
21under this Act, or by the Department.
 
22
Article 4. Administrative Provisions

 
23    Section 4-5. Prohibited acts. A licensee or unlicensed

 

 

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1person or entity entering into non-recourse civil litigation
2funding may not commit, or have committed, on behalf of the
3licensee or unlicensed person or entity, any of the following
4acts:
5    (1) Threatening to use or using the criminal process in
6this or any other state to collect the assignment.
7    (2) Using any device or agreement that would have the
8effect of charging or collecting more fees or charges than
9allowed in this Act, including, but not limited to, entering
10into a different type of transaction with the consumer.
11    (3) Engaging in unfair, deceptive, or fraudulent practices
12related to the non-recourse civil litigation funding.
13    (4) Threatening to take any action against a consumer that
14is prohibited by this Act or making any misleading or deceptive
15statements regarding the non-recourse civil litigation
16funding.
17    (5) Making a misrepresentation of a material fact by an
18applicant for licensure in obtaining or attempting to obtain a
19license.
20    (6) Including any of the following provisions in
21non-recourse civil litigation funding contracts:
22        (A) a confession of judgment clause;
23        (B) a mandatory arbitration clause that is oppressive,
24    unfair, unconscionable, or substantially in derogation of
25    the rights of consumers; or
26        (C) a provision that the consumer agrees not to assert

 

 

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1    any claim or defense arising out of the contract.
2    (7) Taking any power of attorney.
 
3    Section 4-10. Enforcement and remedies.
4    (a) The remedies provided in this Act are cumulative and
5apply to persons or entities subject to this Act.
6    (b) Any material violation of this Act, including the
7commission of an act prohibited under Section 4-5, constitutes
8a violation of the Consumer Fraud and Deceptive Business
9Practices Act.
10    (c) If any provision of the written agreement described in
11Section 2-5 violates this Act, then that provision is
12unenforceable against the consumer.
13    (d) Subject to the Illinois Administrative Procedures Act,
14the Secretary may hold hearings, make findings of fact,
15conclusions of law, issue cease and desist orders, have the
16power to issue fines of up to $10,000 per violation, refer the
17matter to the appropriate law enforcement agency for
18prosecution under this Act, and suspend or revoke a license
19granted under this Act. All proceedings shall be open to the
20public.
21    (e) The Secretary may issue a cease and desist order to any
22licensee or other person doing business without the required
23license, when in the opinion of the Secretary the licensee or
24other person is violating or is about to violate any provisions
25of this Act or any rule or requirement imposed in writing by

 

 

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1the Department as a condition of granting any authorization
2permitted by this Act. In addition to any other action
3authorized by this Act, if the Secretary determines that a
4civil litigation funding company is engaged in or is believed
5to be engaged in activities that may constitute a violation of
6this Act and the Secretary is able to show that an emergency
7exists, the Secretary may suspend the civil litigation funding
8company's license for a period not exceeding 180 calendar days.
9The cease and desist order and emergency suspension permitted
10by this subsection (e) may be issued prior to a hearing.
11    The Secretary shall serve notice of his or her action,
12including, but not limited to, a statement of the reasons for
13the action, either personally or by certified mail, return
14receipt requested. Service by certified mail shall be deemed
15completed when the notice is deposited in the U.S. Mail.
16    Within 10 business days after service of the cease and
17desist order, the licensee or other person may request a
18hearing in writing. The Secretary shall schedule a hearing
19within 30 days after the request for a hearing unless otherwise
20agreed to by the parties. The Secretary shall have the
21authority to adopt rules for the administration of this
22Section.
23    If it is determined that the Secretary had the authority to
24issue the cease and desist order, he or she may issue such
25orders as may be reasonably necessary to correct, eliminate, or
26remedy the conduct.

 

 

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1    The powers vested in the Secretary by the subsection (e)
2are additional to any and all other powers and remedies vested
3in the Secretary by law, and nothing in this subsection (e)
4shall be construed as requiring that the Secretary shall employ
5the power conferred in this subsection instead of or as a
6condition precedent to the exercise of any other power or
7remedy vested in the Secretary.
8    (f) The Secretary may, after 10 business days notice by
9registered mail to the licensee at the address set forth in the
10license stating the contemplated action an in general the
11grounds therefore, fine the licensee an amount not exceeding
12$10,000 per violation, or revoke or suspend any license issued
13by the Department if found that:
14        (1) the licensee has failed to comply with any
15    provision of this Act or any order, decision, finding,
16    rule, regulation, or direction of the Secretary lawfully
17    made under the authority of this Act; or
18        (2) any fact or condition exists that, if it had
19    existed at the time of the original application for the
20    license, clearly would have warranted the Secretary in
21    refusing to issue the license.
22        No revocation, suspension, or surrender of any license
23    shall impair or affect the obligation of any pre-existing
24    lawful contract between the civil litigation company and a
25    consumer.
26        The Secretary may issue a new license to a licensee

 

 

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1    whose license has been revoked when facts or conditions
2    that clearly would have warranted the Secretary in refusing
3    originally to issue the license no longer exist.
4        In every case in which a license or renewal of a
5    license is denied, the Secretary shall serve the licensee
6    with notice of his or her action, including a statement of
7    the reasons for his or her actions, either personally, or
8    by certified mail, return receipt requested. Service by
9    certified mail shall be deemed completed when the notice is
10    deposited in the U.S. Mail.
11        An order assessing a fine, an order revoking or
12    suspending a license, or an order denying or refusing to
13    renew a license shall take effect upon service of the order
14    unless the licensee requests a hearing, in writing, within
15    10 days after the date of service. In the event a hearing
16    is requested, the order shall be stayed until final
17    administrative order is entered.
18        If the licensee requests a hearing, the Secretary shall
19    schedule a hearing within 30 days after the request for a
20    hearing unless otherwise agreed to by the parties.
21        The hearing shall be held at a time and place
22    designated by the Secretary. The Secretary, and any
23    administrative law judge designated by him or her, shall
24    have the power to administer oaths and affirmations,
25    subpoena witnesses and compel their attendance, take
26    evidence, and require the production of books, papers,

 

 

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1    correspondence, and other records or information that he or
2    she considers relevant or material to the inquiry.
3        The costs of administrative hearings conducted under
4    this Section shall be paid by the licensee.
5    (g) All moneys received by the Department under this Act
6shall be deposited in the Financial Institutions Fund.
 
7    Section 4-15. Bonding.
8    (a) A person or entity engaged in non-recourse civil
9litigation funding under this Act shall post a bond to the
10Department in the amount of $50,000 per license or irrevocable
11letter of credit issued and confirmed by a financial
12institution authorized by law to transact business in the State
13of Illinois.
14    (b) A bond posted under subsection (a) must continue in
15effect for the period of licensure and for 3 additional years
16if the bond is still available. The bond must be available to
17pay damages and penalties to be a consumer harmed by a
18violation of this Act.
19    (c) From time to time the Secretary may require a licensee
20to file a bond in an additional sum if the Secretary determines
21it to be necessary. In no case shall the bond be more than the
22outstanding liabilities of the licensee.
 
23    Section 4-20. Reporting of violations. The Department
24shall report to the Attorney General all material violations of

 

 

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1this Act of which it becomes aware.
 
2    Section 4-25. Rulemaking.
3    (a) The Department may make and enforce such reasonable
4rules, regulations, directions, orders, decisions, and
5findings as the execution and enforcement of the provisions of
6this Act require, and as are not inconsistent therewith. All
7rules, regulations, and directions of a general character shall
8be made available to all licensees in an electronic format.
9    (b) The Department may adopt rules in connection with the
10activities of licensees that are necessary and appropriate for
11the protection of the consumers in this State. These rules
12shall be consistent with this Act.
 
13    Section 4-28. Confidentiality. All information collected
14by the Department under an examination or investigation of a
15civil litigation funding company, including, but not limited
16to, information collected to investigate any complaint against
17a civil litigation funding company filed with the Department,
18shall be maintained for the confidential use of the Department
19and shall not be disclosed. The Department may not disclose
20such information to anyone other than the licensee, law
21enforcement officials, or other regulatory agencies that have
22an appropriate regulatory interest as determined by the
23Secretary, or to a party presenting a lawful subpoena to the
24Department. Information and documents disclosed to a federal,

 

 

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1State, county, or local law enforcement agency shall not be
2disclosed by the agency for any purpose to any other agency or
3person. An order issued by the Department against a civil
4litigation funding company shall be a public record and any
5documents produced in discovery, filed with the administrative
6law judge, or introduced at hearing shall be a public record,
7except as otherwise prohibited by law.
 
8    Section 4-30. Judicial review. All final administrative
9decisions of the Department under this Act are subject to
10judicial review under the provisions of the Administrative
11Review Law and any rules adopted pursuant thereto.
 
12    Section 4-35. Waivers. There shall be no waiver of any
13provision of this Act.
 
14    Section 4-40. Superiority of Act. To the extent this Act
15conflicts with any other State laws, this Act is superior and
16supersedes those laws for the purposes of regulating
17non-recourse civil litigation funding in Illinois.
 
18    Section 4-45. Severability. The provisions of this Act are
19severable under Section 1.31 of the Statute of Statutes.
 
20    Section 4-48. Consumer protection study. The Department
21shall conduct a study to be reported to the Governor and the

 

 

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1leaders of the General Assembly no later than February 1, 2015,
2addressing the adequacy of the consumer protections contained
3in this Act. The study shall include, but not be limited to:
4(1) an analysis of the average percentage of a consumer's
5settlement that is used to return the funding amount in each
6transaction; (2) a survey of consumer complaints filed against
7civil litigation funding companies; (3) a description of the
8benefits and shortcomings of non-recourse civil litigation
9funding to consumers; and (4) any reforms that the Secretary
10recommends to better regulate civil litigation funding
11companies.
 
12
Article 90. Amendatory Provisions

 
13    Section 90-1. The Regulatory Sunset Act is amended by
14changing Section 4.25 as follows:
 
15    (5 ILCS 80/4.25)
16    Sec. 4.25. Acts Act repealed on January 1, 2015 and May 31,
172015.
18    (a) The following Act is repealed on January 1, 2015:
19    The Genetic Counselor Licensing Act.
20    (b) The following Act is repealed on May 31, 2015:
21    The Non-Recourse Civil Litigation Funding Act.
22(Source: P.A. 93-1041, eff. 9-29-04.)
 

 

 

09600SB3322ham002- 31 -LRB096 17078 CEL 44750 a

1    Section 90-5. The Consumer Installment Loan Act is amended
2by changing Section 21 as follows:
 
3    (205 ILCS 670/21)  (from Ch. 17, par. 5427)
4    Sec. 21. Application of Act. This Act does not apply to any
5person, partnership, association, limited liability company,
6or corporation doing business under and as permitted by any law
7of this State or of the United States relating to banks,
8savings and loan associations, savings banks, credit unions, or
9licensees under the Residential Mortgage License Act for
10residential mortgage loans made pursuant to that Act. This Act
11does not apply to business loans. This Act does not apply to
12payday loans. This Act does not apply to non-recourse civil
13litigation funding.
14(Source: P.A. 94-13, eff. 12-6-05.)
 
15    Section 90-10. The Consumer Fraud and Deceptive Business
16Practices Act is amended by changing Section 2Z as follows:
 
17    (815 ILCS 505/2Z)  (from Ch. 121 1/2, par. 262Z)
18    Sec. 2Z. Violations of other Acts. Any person who knowingly
19violates the Automotive Repair Act, the Automotive Collision
20Repair Act, the Home Repair and Remodeling Act, the Dance
21Studio Act, the Physical Fitness Services Act, the Hearing
22Instrument Consumer Protection Act, the Illinois Union Label
23Act, the Job Referral and Job Listing Services Consumer

 

 

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1Protection Act, the Travel Promotion Consumer Protection Act,
2the Credit Services Organizations Act, the Automatic Telephone
3Dialers Act, the Pay-Per-Call Services Consumer Protection
4Act, the Telephone Solicitations Act, the Illinois Funeral or
5Burial Funds Act, the Cemetery Oversight Act, the Cemetery Care
6Act, the Safe and Hygienic Bed Act, the Pre-Need Cemetery Sales
7Act, the High Risk Home Loan Act, the Payday Loan Reform Act,
8the Mortgage Rescue Fraud Act, subsection (a) or (b) of Section
93-10 of the Cigarette Tax Act, subsection (a) or (b) of Section
103-10 of the Cigarette Use Tax Act, the Electronic Mail Act, the
11Internet Caller Identification Act, paragraph (6) of
12subsection (k) of Section 6-305 of the Illinois Vehicle Code,
13Section 11-1431, 18d-115, 18d-120, 18d-125, 18d-135, 18d-150,
14or 18d-153 of the Illinois Vehicle Code, Article 3 of the
15Residential Real Property Disclosure Act, the Automatic
16Contract Renewal Act, the Non-Recourse Civil Litigation
17Funding Act, or the Personal Information Protection Act commits
18an unlawful practice within the meaning of this Act.
19(Source: P.A. 95-413, eff. 1-1-08; 95-562, eff. 7-1-08; 95-876,
20eff. 8-21-08; 96-863, eff. 1-19-10; 96-1369, eff. 1-1-11;
2196-1376, eff. 7-29-10; revised 9-2-10.)
 
22    Section 99. Effective date. This Act takes effect 180 days
23after becoming law.".