Makes litigation loan agreements subject to state usury laws.

Rhode Island Bill Summary: Litigation Lending Agreements

This bill would apply Rhode Island's existing interest rate limits (known as "usury laws") to a specific type of financial product called litigation loans, sometimes called "lawsuit loans" or "legal funding." These are cash advances that companies provide to people who have filed lawsuits — typically personal injury cases — while they wait for their case to settle or go to trial. Currently, these loans often fall outside the rules that cap how much interest lenders can charge on other types of loans.

Under this bill, companies that offer litigation loans would have to follow the same interest rate rules that apply to other lenders in Rhode Island. Usury laws set a maximum amount of interest a lender can charge, protecting borrowers from extremely high rates. Without these protections, litigation lenders can sometimes charge very high interest rates that significantly reduce the amount of money a person actually receives when their lawsuit is resolved.

This bill primarily affects two groups: people who take out litigation loans while waiting for their lawsuits to settle, and the companies that provide those loans. For borrowers — often people who are injured and unable to work while their case is pending — it could mean stronger financial protections and clearer terms. For litigation lending companies, it would mean new restrictions on how much they can charge. The bill has been introduced and sent to the Senate Judiciary Committee, where it will be reviewed before any further action is taken.