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Sub. H. B. No. 248 As Passed by the HouseAs Passed by the House
127th General Assembly | Regular Session | 2007-2008 |
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Cosponsors:
Representatives Adams, Bacon, Boyd, Combs, Domenick, Dyer, Evans, Flowers, Hughes, Mallory, McGregor, J., Oelslager, Patton, Webster
A BILL
To enact section 1349.55 of the Revised Code to set
forth requirements governing non-recourse civil
litigation advance contracts.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:
Section 1. That section 1349.55 of the Revised Code be
enacted to read as follows:
Sec. 1349.55. (A) As used in this section:
(1) "Non-recourse civil litigation advance" means a
transaction in which a company makes a cash payment to a consumer
who has a pending civil claim or action in exchange for the right
to receive an amount out of the proceeds of any realized
settlement, judgment, award, or verdict the consumer may receive
in the civil lawsuit.
(2) "Company" means a person or entity that enters into a
non-recourse civil litigation advance transaction with a consumer.
(3) "Consumer" means a person or entity residing or domiciled
in Ohio and represented by an attorney with a pending civil claim
or action.
(B) All contracts for a non-recourse civil litigation advance
shall comply with the following requirements:
(1) 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:
(a) The total dollar amount to be advanced to the consumer;
(b) An itemization of one-time fees;
(c) The total dollar amount to be repaid by the consumer, in
six-month intervals for thirty-six months, and including all fees;
(d) The annual percentage rate of return, calculated as of
the last day of each six-month interval, including frequency of
compounding.
(2) 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 company]." The contract also shall specify that in order
for the cancellation to be effective, the consumer must either
return to the company the full amount of disbursed funds by
delivering the company's uncashed check to the company's offices
in person, within five business days of 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
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 of receiving funds
from the
company, at the address specified in the contract for
the
cancellation.
(3) The contract shall contain the following statement in at
least twelve-point boldface type: "THE COMPANY AGREES THAT IT
SHALL HAVE NO RIGHT TO AND WILL NOT MAKE ANY DECISIONS WITH
RESPECT TO THE CONDUCT OF THE UNDERLYING CIVIL ACTION OR CLAIM OR
ANY SETTLEMENT OR RESOLUTION THEREOF AND THAT THE RIGHT TO MAKE
THOSE DECISIONS REMAINS SOLELY WITH YOU AND YOUR
ATTORNEY IN THE
CIVIL ACTION OR CLAIM."
(4) The contract shall contain the initials of the consumer
on each page.
(5) 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
CIVIL ACTION OR CLAIM HAS PROVIDED NO TAX,
PUBLIC OR PRIVATE BENEFIT PLANNING, OR
FINANCIAL ADVICE REGARDING
THIS TRANSACTION."
(6) The contract shall contain a written acknowledgment by
the
attorney representing the consumer in the civil action or
claim that states all of the following:
(a) The attorney representing the consumer in the civil
action or 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.
(b) The attorney representing the consumer in the civil
action or claim is being paid on a contingency basis per a
written fee agreement.
(c) All proceeds of the civil litigation will be disbursed
via the trust account of the attorney representing the consumer in
the civil action or claim or a settlement fund established to
receive the proceeds of the civil litigation from the defendant on
behalf of the consumer.
(d) The attorney representing the consumer in the civil
action or claim is following the written instructions of the
consumer with regard to the non-recourse civil litigation advance.
(7) For English, French, and Spanish speaking consumers, the
contract shall be written in the same language in which the oral
negotiations are conducted between the company and the consumer.
For consumers whose primary language is not English, French,
or
Spanish, the principal terms of the contract shall be
translated
in writing into the consumer's native language, the
consumer
shall sign the translated document containing the
principal terms
and initial each page, and the translator shall
sign a notarized
affirmation confirming that the principal terms
have been
presented to the consumer in the consumer's native
language and
acknowledged by the consumer, in writing. Principal
terms shall
include all items that must be disclosed by this
section.
(C) If a dispute arises between the consumer and the company
concerning the contract for a non-recourse civil litigation
advance, the responsibilities of the attorney representing the
consumer in the civil action or claim shall be no greater than the
attorney's responsibilities under the Ohio Rules of Professional
Conduct.
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