§ 25-3303 — Contracts for nonrecourse civil litigation funding; right to cancel; notice; statements required

Nebraska § 25-3303

• Jurisdiction: Nebraska
• Ch. 25: Courts; Civil Procedure

Text

(1) All contracts for nonrecourse civil
litigation funding shall comply with the following requirements:
(a) The contract
shall be completely filled in and contain on the front page, appropriately
headed and in at least twelve-point bold type, the following disclosures:
(i) The total
dollar amount to be funded to the consumer;
(ii) An itemization of one-time fees;
(iii) The total
dollar amount to be repaid by the consumer, in six-month intervals for thirty-six
months, and including all fees;
(iv) The total dollar amount in broker fees
that are involved in the transaction; and
(v) The annual percentage rate of return,
calculated as of the last day of each six-month interval, including frequency
of compounding;
(b) The contract shall provide that the consumer may cancel the
contract within five business days following the consumer's receipt of funds
without penalty or further obligation. The contract shall contain the following
notice written in a clear and conspicuous manner: "CONSUMER'S RIGHT TO CANCELLATION:
YOU MAY CANCEL THIS CONTRACT WITHOUT PENALTY OR FURTHER OBLIGATION WITHIN
FIVE BUSINESS DAYS FROM THE DATE YOU RECEIVE FUNDING FROM (insert name of
civil litigation funding company)." The contract also shall specify that in
order for the cancellation to be effective, the consumer shall either return
the full amount of disbursed funds to the civil litigation funding company
by delivering the civil litigation funding company's uncashed check to the
civil litigation funding company's offices in person, within five business
days after the disbursement of funds, or mail a notice of cancellation and
include in that mailing a return of the full amount of disbursed funds in
the form of the civil litigation funding company's uncashed check or a registered
or certified check or money order, by insured, registered, or certified United
States mail, postmarked within five business days after receiving funds from
the civil litigation funding company, to the address specified in the contract
for the cancellation;
(c) The contract shall contain the following statement in at least
twelve-point boldface type: "THE CIVIL LITIGATION FUNDING COMPANY AGREES THAT
IT SHALL HAVE NO RIGHT TO AND WILL NOT MAKE ANY DECISIONS WITH RESPECT TO
THE CONDUCT OF THE UNDERLYING LEGAL CLAIM OR ANY SETTLEMENT OR RESOLUTION
THEREOF AND THAT THE RIGHT TO MAKE THOSE DECISIONS REMAINS SOLELY WITH YOU
AND YOUR ATTORNEY IN THE LEGAL CLAIM.";
(d) The contract shall contain an acknowledgment
by the consumer that such consumer has reviewed the contract in its entirety;
(e) The contract
shall contain the following statement in at least twelve-point boldface type
located immediately above the place on the contract where the consumer's signature
is required: "DO NOT SIGN THIS CONTRACT BEFORE YOU READ IT COMPLETELY OR IF
IT CONTAINS ANY BLANK SPACES. YOU ARE ENTITLED TO A COMPLETELY FILLED IN COPY
OF THIS CONTRACT. BEFORE YOU SIGN THIS CONTRACT YOU SHOULD OBTAIN THE ADVICE
OF AN ATTORNEY. DEPENDING ON THE CIRCUMSTANCES, YOU MAY WANT TO CONSULT A
TAX, PUBLIC OR PRIVATE BENEFIT 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 TRANSACTION.";
(f) The contract
shall contain a written acknowledgment by the attorney representing the consumer
in the legal claim that states all of the following:
(i) The attorney representing
the consumer in the legal claim has reviewed the contract and all costs and
fees have been disclosed including the annualized rate of return applied to
calculate the amount to be paid by the consumer;
(ii) The attorney representing
the consumer in the legal claim is being paid on a contingency basis per a
written fee agreement;
(iii) All proceeds of the civil litigation will be disbursed via
the trust account of the attorney representing the consumer in the legal claim
or a settlement fund established to receive the proceeds of the civil litigation
from the defendant on behalf of the consumer;
(iv) The attorney representing
the consumer in the legal claim is following the written instructions of the
consumer with regard to the nonrecourse civil litigation funding;
(v) The attorney
representing the consumer in the legal claim shall not be paid or offered
to be paid commissions or referral fees; and
(vi) Whether the attorney
representing the consumer in the legal claim does or does not have a financial
interest in the civil litigation funding company; and
(g) All contracts to the
consumer shall have in plain language, in a box with bold fifteen-point font
stating the following in capitalized letters: "IF THERE IS NO RECOVERY OF
ANY MONEY FROM YOUR LEGAL CLAIM OR IF THERE IS NOT ENOUGH MONEY TO PAY THE
CIVIL LITIGATION FUNDING COMPANY BACK IN FULL, YOU WILL NOT OWE THE CIVIL
LITIGATION FUNDING COMPANY ANYTHING IN EXCESS OF YOUR RECOVERY UNLESS YOU
HAVE VIOLATED THIS PURCHASE AGREEMENT.".
(2) If a dispute arises between the consumer
and the civil litigation funding company concerning the contract for nonrecourse
civil litigation funding, the responsibilities of the attorney representing
the consumer in the legal claim shall be no greater than the attorney's responsibilities
under the Nebraska Rules of Professional Conduct.

Legislative History

Source: Laws 2010, LB1094, § 3.