Provides for "litigation financing" regulation by DBR.

# Summary of the Third-Party Litigation Financing Consumer Protection Act

This bill would create a new regulatory framework in Rhode Island for "litigation financing," which is the practice where a company provides money to a person involved in a lawsuit in exchange for a portion of any future settlement or court award. For example, if someone is injured in a car accident and needs money to pay bills while waiting for their case to resolve, a litigation financing company might advance them cash now in return for a share of whatever they eventually receive from the lawsuit. The bill would place oversight of these companies under the Rhode Island Department of Business Regulation (DBR).

The legislation would establish rules that litigation financing companies must follow when doing business in the state. This would likely include requirements around licensing, disclosure of terms to consumers, caps or transparency around fees and rates, and other consumer protections designed to ensure that people seeking these financial arrangements are treated fairly and understand what they are agreeing to. The goal is to bring an industry that currently operates with limited state oversight under a formal regulatory structure.

The bill primarily affects two groups: consumers who use litigation financing — often people in difficult financial situations waiting for legal cases to be resolved — and the companies that provide this type of funding. By requiring DBR oversight, the bill aims to protect consumers from potentially unfair or predatory terms while also creating clear rules of the road for financing companies operating in Rhode Island.

The bill was introduced in the Rhode Island House and referred to the House Judiciary Committee. The committee has recommended that the measure be held for further study, with a hearing scheduled for January 2026, meaning lawmakers want more time to examine the issue before deciding whether to move forward.