N.Y. Financial Services Law § 1003: Prohibitions and charge limitations

§ 1003. Prohibitions and charge limitations. Litigation funding

companies shall be prohibited from:

(a) paying or offering to pay commissions, referral fees, or any other

form of consideration to any attorney, law firm, medical provider,

chiropractor or physical therapist or any of their employees for

referring a consumer to the company;

(b) accepting any commissions, referral fees, rebates or any other

form of consideration from an attorney, law firm, medical provider,

chiropractor or physical therapist or any of their employees;

(c) advertising materially false or misleading information regarding

its products or services;

(d) referring a customer or potential customer to a specific attorney,

law firm, medical provider, chiropractor or physical therapist or any of

their employees; provided, however, if a customer needs legal

representation, the company may refer the customer to a local or state

bar association referral service;

(e) knowingly providing funding to a consumer who has previously

signed a litigation funding contract with a another litigation funding

company for the same claim without first acquiring or extinguishing the

consumer's obligations pursuant to the prior litigation funding

contract, provided that nothing herein shall prohibit multiple companies

from agreeing to contemporaneously provide funding to a consumer

provided that the consumer and the consumer's attorney consent to the

arrangement in writing as long as the interest held by those litigation

funding companies, in aggregate, does not exceed the funded amount plus

twenty-five percent of the proceeds of the consumer's legal claim;

(f) influencing or attempting to influence any decisions with respect

to the conduct of the consumer's legal claim or any settlement or

resolution thereof. The right to make such decisions shall remain solely

with the consumer and the consumer's attorney in the legal claim;

(g) obtaining a waiver of any remedy or right by the consumer,

including but not limited to the right to trial by jury;

(h) knowingly paying or offering to pay for court costs, filing fees

or attorney's fees either during or after the resolution of the legal

claim, using funds from the litigation funding transaction;

(i) entering into a litigation funding contract with a consumer who

the litigation funding company knows is represented by an attorney or

law firm in the legal claim that has a financial interest in the

litigation funding company offering litigation funding to that consumer;

(j) requiring an attorney who represents a consumer to disclose

privileged information to the litigation funding company without the

written consent of the consumer. The attorney who represents the

consumer shall disclose to the litigation funding company the amount of

the proceeds of the settlement, judgment, award or verdict;

(k) requiring a consumer to pay charges that exceed twenty-five

percent of the gross proceeds from the applicable legal claim plus the

funded amount;

(l) requiring a consumer to pay anything that exceeds the available

proceeds from a resolution of the consumer's claim;

(m) providing more than five hundred thousand dollars to a consumer to

fund litigation; and

(n) entering into a litigation funding contract with a consumer if the

litigation funding company has any reasonable basis to believe that the

consumer's legal claim is frivolous, based on a false statement of facts

or otherwise that it is not meritorious.