SB 1215 — litigation; financing; consumer protection; enforcement

SenateHouse Engrossed Senate Bill litigation;

enforcement State of Arizona Senate Fifty-seventh Legislature First Regular Session CHAPTER 226 SENATE BILL 1215 AN ACT AMENDING TITLE 12, ARIZONA REVISED STATUTES, BY ADDING CHAPTER 28;

1215 (b) A COUNSEL OF RECORDRECORD, FORA LEGALLAW SERVICESFIRM PROVIDEDOF ONRECORD AOR CONTINGENCYANY FEEREFERRING BASISCOUNSEL FOR LEGAL SERVICES OR ADVANCEDADVANCEMENT OF LEGAL COSTS PROVIDED BY COUNSEL OF RECORD, WHERE THE SERVICES OR COSTS ARE PROVIDED BY A LEGAL COUNSEL OF RECORD IN ACCORDANCE WITH THE RULES OF PROFESSIONAL CONDUCT ADOPTED BY THE SUPREME COURT.

(h) WHERE THERE IS NO RIGHT TO PAYMENT IN EXCESS OF THE FUNDING ACTUALLY PROVIDED.

IF THERE HAS BEEN A PRIOR DISCLOSURE OF THE EXISTENCE OF LITIGATION FINANCING IN A CLASS ACTION LITIGATION, THE COURT SHALL CONSIDER THE EXISTENCE OF LITIGATION FINANCING AND ANY RELATED CONFLICTS OF INTEREST WHEN DETERMINING WHETHER A CLASS REPRESENTATIVE OR CLASS COUNSEL WOULD ADEQUATELY AND FAIRLY REPRESENT THE INTERESTS OF THE CLASS.

IF THERE HAS BEEN A PRIOR DISCLOSURE OF THE EXISTENCE OF LITIGATION FINANCING IN MULTIDISTRICT LITIGATION, THE COURT SHALL CONSIDER THE EXISTENCE OF LITIGATION FINANCING AND ANY RELATED CONFLICTS OF INTEREST WHEN APPROVING OR APPOINTING COUNSEL TO LEADERSHIP POSITIONS.

FOR THE PURPOSES OF THIS SUBSECTION, "LEADERSHIP POSITIONS" MEANS ANY LEAD COUNSEL, COLEAD COUNSEL, COMMON BENEFIT COUNSEL, STEERING COMMITTEE- MEMBERSHIP,2 EXECUTIVE- COMMITTEES.B. MEMBERSHIP AND OTHER SIMILAR POSITIONS OR ROLES.

-1215 2COMMITTEE -MEMBERSHIP, S.B.EXECUTIVE COMMITTEE MEMBERSHIP AND OTHER SIMILAR POSITIONS OR ROLES.

1215 12-3453.

Prohibited conductconduct; A.

Aapplicability LITIGATIONA. FINANCIER MAY NOT PAY OR OFFER TO PAY A COMMISSION, REFERRAL FEE OR OTHER CONSIDERATION TO LEGAL COUNSEL, A LAW FIRM OR A LICENSED HEALTH CARE PROVIDER, FOR REFERRING A PERSON TO THE LITIGATION FINANCIER.

A LITIGATION FINANCIER MAY NOT PAY OR OFFER TO PAY A COMMISSION, REFERRAL FEE OR OTHER CONSIDERATION TO LEGAL COUNSEL, A LAW FIRM OR A LICENSED HEALTH CARE PROVIDER, FOR REFERRING A PERSON TO THE LITIGATION FINANCIER WITHOUT DISCLOSING IN WRITING TO THE POTENTIAL BORROWER.

THE DISCLOSURE MUST BE MADE BEFORE ENTERING INTO THE LITIGATION FINANCING AGREEMENT AND MUST BE SEPARATELY ACKNOWLEDGED AND AGREED TO BY THE POTENTIAL BORROWER, INCLUDING THE AMOUNT OF THE COMMISSION, REFERRAL FEE OR OTHER CONSIDERATION TO BE PAID FOR THE REFERRAL ON BEHALF OF THE BORROWER.

12-3454.

Required disclosures A.

EXCEPT AS OTHERWISE STIPULATED OR ORDERED BY A COURT OF COMPETENT JURISDICTION, A PARTY TO AN ACTION OR THE PARTY'S COUNSEL OF RECORD, WITHOUT AWAITING A DISCOVERY REQUEST AND WITHIN THIRTY DAYS AFTER COMMENCEMENT OF THE ACTION, SHALL DISCLOSE TO EACH OTHER PARTY TO THE ACTION AND TO ANY KNOWN PERSON, INCLUDING AN INSURER, WITH A PREEXISTING CONTRACTUAL OBLIGATION TO INDEMNIFY OR DEFEND A PARTY TO THE ACTION THE FOLLOWING INFORMATION:

1.

WHETHER THE PARTY OR ITS COUNSEL OF RECORD HAS ENTERED INTO A LITIGATION FINANCING AGREEMENT.

2.

THE NAME OF THE LITIGATION FINANCIER.

B.

THE DISCLOSURE OBLIGATIONS REQUIRED BY THIS SECTION ARE CONTINUING OBLIGATIONS AND ARE TRIGGERED ON ANY PARTY OR THE PARTY'S LEGAL COUNSEL OF RECORD ENTERING INTO A NEW LITIGATION FINANCING AGREEMENT OR AMENDING AN EXISTING LITIGATION FINANCING AGREEMENT.

ON RECEIPT OF THE DISCLOSURES REQUIRED BY SUBSECTION A OF THIS SECTION,SECTION ANYAPPLIES PARTY TO THECLASS ACTIONACTIONS MAYAND MAKEMULTIDISTRICT APPLICATIONLITIGATION. TO THE COURT OVERSEEING THE ACTION FOR ADDITIONAL INFORMATION CONCERNING THE LITIGATION FINANCING AGREEMENT, INCLUDING REQUESTING AN IN CAMERA REVIEW OF THE LITIGATION FINANCING AGREEMENT, IF THE PARTY HAS A BELIEF THAT IS EITHER REASONABLE OR SUPPORTED WITH A FACTUAL BASIS THAT THE EXISTENCE OF THE LITIGATION FINANCING AGREEMENT, THE LITIGATION FINANCIER OR ANY OWNER OR INVESTOR IN THE LITIGATION FINANCIER MAY NEGATIVELY IMPACT THE PARTY'S RIGHTS OR INTERESTS IN THE ACTION OR THE PARTY'S PROPRIETARY INFORMATION.

THE ACKNOWLEDGEMENT REQUIRED BY SUBSECTION A PARTYOF TOTHIS ANSECTION ACTIONSHALL MAYBE SEEKMADE DISCOVERYBY CONCERNINGTHE ANYCLASS OFREPRESENTATIVE OR THE FOLLOWING:NAMED PLAINTIFFS.

1.12-3454.

WHETHER ANY OWNER OR INVESTOR IN THE LITIGATION FINANCIER IS A FOREIGN COUNTRY OF CONCERN OR A FOREIGN ENTITY OF CONCERN.

2.

WHETHER THE LITIGATION FINANCIER IS A HEDGE FUND OR WHETHER ANY OWNER OR INVESTOR IN THE LITIGATION FINANCIER IS A HEDGE FUND OR WHETHER THE LITIGATION FINANCING AGREEMENT IS PART OF A PORTFOLIO OR SIMILAR POOLED FINANCING ARRANGEMENT.

3.

WHETHER THERE ARE ANY PROVISIONS IN THE LITIGATION FINANCING AGREEMENT ALLOWING FOR CONTROL, DIRECTION OR INFLUENCE OVER THE ACTION.

D.

ALL OF THE DISCLOSURE OBLIGATIONS REQUIRED BY THIS SECTION APPLY TO CLASS ACTIONS AND MULTIDISTRICT LITIGATION.

- 3 - S.B.

1215 12-3455.

A LITIGATION FINANCIER WHO KNOWINGLY VIOLATES SECTION 12-3452 OR 12-3453 COMMITS AN UNLAWFUL PRACTICE UNDER SECTION 44-1522.

ONLY THE COURTATTORNEY SHALLGENERAL DETERMINEOR SANCTIONSPARTIES TO THE LITIGATION FOR ANYWHICH PARTYLITIGATION THATFINANCING FAILSHAS TOBEEN MAKEPROVIDED MAY CHALLENGE THE DISCLOSURESLITIGATION REQUIREDFINANCING BYAGREEMENT AS UNLAWFUL UNDER SECTION 12-3454.44-1522.

AN EVASIVE OR INCOMPLETE DISCLOSURE SHALL BE TREATED AS A FAILURE TO MAKE THE REQUIRED DISCLOSURE.

Applicability This act applies to any civil action, administrative proceeding, claim or cause of action that is pending or commenced on or after the effective date of this act.

-APPROVED 4BY -THE GOVERNOR JUNE 27, 2025.

FILED IN THE OFFICE OF THE SECRETARY OF STATE JUNE 27, 2025.