N.Y. Financial Services Law § 1005: Disclosures

§ 1005. Disclosures. All litigation funding contracts shall contain

the disclosures specified in this section, which shall constitute

material terms of the contract. Unless otherwise specified, such

disclosures shall be typed in at least twelve point bold type font and

be placed clearly and conspicuously within the contract, as follows:

(a) On the front page under appropriate headings, language specifying:

(i) the funded amount;

(ii) an itemization of all charges;

(iii) a payment schedule to help consumers understand how much they

will have to pay in charges based on different hypothetical resolutions

of the consumer's legal claim; and

(iv) the following statement in at least twelve point type font: "The

maximum amount you may be required to pay cannot exceed 25% of the gross

recovered amount received for your claim plus the amount paid to you by

the litigation funding company, but only to the extent that there are

proceeds available from your legal claim."

(b) Within the body of the contract in at least twelve point type

font: "Consumer's right to cancellation: you may cancel this contract

without penalty or further obligation within ten business days after the

date you receive the payment from the litigation funding company if you

return to the litigation funding company the full amount of the

disbursed funds."

(c) Within the body of the contract, an explanation that the

litigation funding company shall have no role in deciding whether, when

and how much the legal claim is settled for, however, the consumer and

consumer's attorney must notify the company of the outcome of the legal

claim by settlement or adjudication prior to paying the company from the

proceeds of any settlement, judgment, award or verdict that may be paid

to resolve that consumer's legal claim. The company may seek updated

information about the status of the legal claim but in no event shall

the company interfere with the independent professional judgment of the

attorney in the handling of the legal claim or any settlement thereof.

(d) Within the body of the contract, in all capital letters in at

least twelve point bold type font contained within a box: "THE AGREED

UPON CHARGES SHALL BE PAID ONLY FROM ANY PROCEEDS OF YOUR LEGAL CLAIM,

AND SHALL BE PAID ONLY TO THE EXTENT THAT THERE ARE AVAILABLE PROCEEDS

FROM YOUR LEGAL CLAIM. YOU WILL NOT OWE (INSERT NAME OF THE 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 LITIGATION FUNDING

COMPANY)."

(e) Located immediately above the place on the contract where the

consumer's signature is required, in twelve point bold type font: "Do

not sign this contract before you read it completely. Do not sign this

contract if it contains any blank spaces. You are entitled to a

completely filled-in copy of the contract before you sign this contract.

Depending on the circumstances, you may want to consult a tax, public or

private benefits planning, or financial professional. You acknowledge

that your attorney in the legal claim has provided no tax, public or

private benefit planning, or financial advice regarding this contract.

You further acknowledge that your attorney has explained the terms and

conditions of the litigation funding contract."

(f) A copy of the executed contract shall promptly be delivered to the

attorney for the consumer.

(g) The following shall be printed within the body of the contract in

all capital letters in at least twelve point bold type font: "PURSUANT

TO THE LAWS OF THE STATE OF NEW YORK, THE MAXIMUM AMOUNT YOU MAY BE

REQUIRED TO PAY CANNOT EXCEED 25% OF THE GROSS RECOVERED AMOUNT RECEIVED

FOR YOUR CLAIM PLUS THE AMOUNT PAID TO YOU BY THE LITIGATION FUNDING

COMPANY."