§ 899-DDD — Contract requirements; right of rescission

* § 899-ddd. Contract requirements; right of rescission. 1. All\nconsumer litigation funding contracts shall meet the following\nrequirements:\n (a) a contract shall be written in a clear and coherent manner using\nwords with common, everyday meanings to enable the average consumer who\nmakes a reasonable effort under ordinary circumstances to read and\nunderstand the terms of the contract without having to obtain the\nassistance of a professional;\n (b) the contract shall be completely filled in when presented to the\nconsumer for signature;\n (c) the contract shall contain, in twelve point bold type font, a\nright of rescission, allowing the consumer to cancel the contract\nwithout penalty or further obligation if, within ten business days after\nthe funding date, the consumer returns to the consumer litigation\nfunding company the full amount of the disbursed funds;\n (d) the contract shall contain the initials of the consumer on each\npage;\n (e) a statement that there are no fees or charges to be paid by the\nconsumer other than what is disclosed on the disclosure form;\n (f) in the event the consumer seeks more than one litigation funding\ncontract from the same company, a disclosure providing the cumulative\namount due from the consumer for all transactions, including charges\nunder all contracts, if repayment is made any time after the contracts\nare executed;\n (g) a statement of the maximum amount the consumer may be obligated to\npay under the contract other than in a case of material breach, fraud or\nmisrepresentation by or on behalf of the consumer; and\n (h) clear and conspicuous detail of how charges, including any\napplicable fees, are incurred or accrued.\n 2. The contract shall contain a written acknowledgement by the\nattorney retained by the consumer in the legal claim that attests to the\nfollowing:\n (a) the attorney has reviewed the mandatory disclosures in section\neight hundred ninety-nine-ggg of this article with the consumer;\n (b) the attorney is being paid on a contingency basis pursuant to a\nwritten fee agreement;\n (c) all proceeds of the legal claim will be disbursed via either the\ntrust account of the attorney or a settlement fund established to\nreceive the proceeds of the legal claim on behalf of the consumer;\n (d) the attorney is obligated to disburse funds from the legal claim\nand take any other steps to ensure that the terms of the litigation\nfunding contract are fulfilled;\n (e) the attorney has not received a referral fee or other\nconsideration from the consumer litigation funding company in connection\nwith the consumer litigation funding, nor will the attorney receive such\nfee or other consideration in the future; and\n (f) the attorney in the legal claim has provided no tax, public or\nprivate benefit planning, or financial advice regarding this\ntransaction.\n 3. In the event that the acknowledgement required pursuant to\nparagraph (c) of subdivision two of this section is not completed by the\nattorney or firm retained by the consumer in the legal claim, the\ncontract shall be null and void. The contract shall remain valid and\nenforceable in the event the consumer terminates the initial attorney\nand/or retains a new attorney with respect to the legal claim.\n 4. Notwithstanding paragraph b of subdivision three of section 5-501\nof the general obligations law, no prepayment penalties or fees shall be\ncharged or collected on consumer litigation funding. A prepayment\npenalty on consumer litigation funding shall be unenforceable.\n * NB Effective June 17, 2026\n