HB 5281 — Financial institutions: other; third-party litigation funding transparency; provide for. Creates new act.

HB-5281, As Passed House, May 12, 2026 SUBSTITUTE FOR HOUSE BILL NO.

(a) "Advertise" means publish or disseminate a written, oral, TDR H04629'25 (H-1)(H-4)_HB5281_APH_1 hnwz5ue8irm6 1 electronic, or printed communication or a communication by means of recorded telephone messages or transmitted or broadcast on radio, television, the internet, or similar communications media, including audio recordings, film strips, motion pictures, and videos, published, disseminated, circulated, or placed before the public, directly or indirectly, for the purpose of inducing a consumer to enter into a consumer litigation funding.

TDR H04629'25 (H-1)(H-4)_HB5281_APH_1 hnwz5ue8irm6 1 (d) "Commercial litigation financing agreement" means, subject to subdivision (e), and with respect to a civil action or group of civil actions, a written agreement to which either of the following applies:

(ii) An agreement by an attorney or a law firm to provide legal TDR H04629'25 (H-1)(H-4)_HB5281_APH_1 hnwz5ue8irm6 1 services on a contingency fee basis to a claimant or to advance the claimant's legal costs in accordance with the Michigan rules of professional conduct.

TDR H04629'25 (H-1)(H-4)_HB5281_APH_1 hnwz5ue8irm6 1 (B) A consumer litigation funding company grants to the person a security interest, or transfers to the person any rights or interest, in a consumer litigation funding.

TDR H04629'25 (H-1)(H-4)_HB5281_APH_1 hnwz5ue8irm6 1 (I) The Specially Designated Nationals and Blocked Persons List, also known as the SDN list.

TDR H04629'25 (H-1)(H-4)_HB5281_APH_1 hnwz5ue8irm6 1 (b) The contract must be completely filled in when presented to the consumer for signature.

(iii) The maximum total amount to be assigned by the consumer to TDR H04629'25 (H-1)(H-4)_HB5281_APH_1 hnwz5ue8irm6 1 the company, including the funded amount and all charges.

YOU WILL NOT OWE (INSERT NAME OF THE CONSUMER LITIGATION FUNDING COMPANY) ANYTHING IF THERE ARE NO PROCEEDS FROM YOUR LEGAL CLAIM, UNLESS YOU HAVE VIOLATED ANY MATERIAL TERM OF THIS CONTRACT OR YOU HAVE COMMITTED FRAUD AGAINST (INSERT NAME OF TDR H04629'25 (H-1)(H-4)_HB5281_APH_1 hnwz5ue8irm6 1 CONSUMER LITIGATION FUNDING COMPANY).".

(e) The attorney has not received a referral fee or other TDR H04629'25 (H-1)(H-4)_HB5281_APH_1 hnwz5ue8irm6 1 consideration from the consumer litigation funding company in connection with the consumer litigation funding, nor will the attorney receive such a fee or other consideration in the future.

(e) Refer, in furtherance of an initial legal funding, a customer or potential customer to a specific attorney, law firm, TDR H04629'25 (H-1)(H-4)_HB5281_APH_1 hnwz5ue8irm6 1 health care provider, chiropractor, or physical therapist, or an employee of any of these.

TDR H04629'25 (H-1)(H-4)_HB5281_APH_1 hnwz5ue8irm6 1 (2) If a consumer litigation funding company exercises or attempts to exercise any control or influence over a consumer's claim that is not prohibited by subsection (1) or another provision of this act, the consumer litigation funding company shall act as a fiduciary with respect to the consumer's claim.

(6) An attorney shall not disclose confidential or privileged information to a consumer litigation funding company without the TDR H04629'25 (H-1)(H-4)_HB5281_APH_1 hnwz5ue8irm6 1 written consent of the consumer and in accord with any order of the court in the litigation.

TDR H04629'25 (H-1)(H-4)_HB5281_APH_1 hnwz5ue8irm6 1 Sec.

TDR H04629'25 (H-1)(H-4)_HB5281_APH_1 hnwz5ue8irm6 1 Sec.

(5) An applicant under this section shall also, at the time of filing the application, file with the department of insurance and financial services, if the department of insurance and financial services so requires, a bond satisfactory to the department of TDR H04629'25 (H-1)(H-4)_HB5281_APH_1 hnwz5ue8irm6 1 insurance and financial services in an amount not to exceed $10,000.00.

(8) A consumer litigation funding company or commercial litigation financier that registered with the department of insurance and financial services after the effective date of this act or the date on which the department of insurance and financial services makes applications for registration under this section TDR H04629'25 (H-1)(H-4)_HB5281_APH_1 hnwz5ue8irm6 1 available to the public, whichever is later, and before 180 days after that date may engage in consumer litigation funding or commercial litigation financing, as applicable, while the company's application for registration under this section is pending approval with the department of insurance and financial services.

TDR H04629'25 (H-1)(H-4)_HB5281_APH_1 hnwz5ue8irm6 1 (a) The number of litigation fundings by the company or financier that year.

(1) Except as otherwise stipulated or ordered by the court, a claimant or the claimant's attorney shall, without awaiting a discovery request, provide to all parties any commercial TDR H04629'25 (H-1)(H-4)_HB5281_APH_1 hnwz5ue8irm6 1 litigation financing agreement at the time a legal claim is asserted or commenced and any time thereafter that a commercial litigation financing agreement is executed or amended.

The department of insurance and financial services may promulgate only those rules necessary to effectuateimplement thesections purposes11 ofand this12. act under the administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to 24.328.

Rules promulgated under this section must be promulgated under the administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to 24.328.

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