Litigation financing; requirements; attorney general
HB 2755 creates a new chapter in Title 12 of Arizona law governing litigation financing agreements. The bill defines litigation financing broadly as funding provided for fees, costs, or other litigation-related expenses in exchange for repayment or other consideration that depends in any way on the outcome of a case or related portfolio of cases. It also defines related terms such as “funded action,” “litigation financier,” and “litigation blind pool,” while carving out several arrangements from the definition, including contingency-fee representation, certain personal-use loans, insurance-related obligations, nonprofit funding, and some medical receivables financing.
The bill requires litigation financiers to maintain “blind pool” investment structures and prohibits them from disclosing identifying information about current, pending, or future funded litigation, as well as investors’ proprietary or confidential information and trade secrets of parties to funded actions. It gives enforcement authority exclusively to the Arizona attorney general, who may investigate suspected violations, obtain records and testimony, accept assurances of discontinuance, and seek injunctions and other remedies through court action. The bill applies to litigation financing in Arizona that is pending or begins on or after the effective date, and to financiers doing business in the state, but not to financiers operating solely outside Arizona.
HB 2755 would add a new regulatory framework to Arizona’s civil code for third-party litigation funding. It would impose confidentiality and structural requirements on litigation financiers, create enforcement powers for the attorney general, and authorize court-ordered injunctions, restitution, receivership, and occupational restrictions for violations. The bill would affect litigation funders, parties to lawsuits, counsel involved in funded matters, and potentially investors in litigation-financing vehicles, while preserving existing contingency-fee and certain commercial lending arrangements outside the new chapter’s scope.
No committee transcripts or recorded votes were provided, so the bill’s sentiment can only be inferred from its structure and sponsor framing. The measure appears to reflect concern about transparency, confidentiality, and oversight in litigation funding, with the attorney general positioned as the sole enforcer. At the same time, the bill’s detailed exemptions suggest an effort to avoid disrupting ordinary legal financing, insurance, nonprofit support, and conventional lending.
The main points of contention likely center on whether litigation financing should be tightly regulated as a potentially opaque or outcome-driven financial practice, versus treated as a legitimate source of access to justice and case funding. Supporters of regulation may favor the blind-pool and nondisclosure requirements to protect litigants, investors, and confidential case information, while critics may argue the bill could chill third-party funding, limit capital access for plaintiffs, and give the attorney general broad investigative authority. The scope of the definition of litigation financing, the exclusivity of attorney general enforcement, and the breadth of the confidentiality restrictions are the most likely areas of dispute.