LITIGATION FINANCING TRANSPARENCY – Adds to existing law to establish the Litigation Financing Transparency, National Security, and Consumer Protection Act.
House Bill 646 would create a new chapter in Idaho law regulating third-party litigation financing, which is funding provided to a plaintiff, claimant, or their legal representative in exchange for repayment tied to the outcome of a legal claim. The bill requires litigation financiers to register with the secretary of state, disclose ownership and contact information, and keep registration information current. It also requires written contracts with specified disclosures, including a five-business-day cancellation right, limits on the financier’s recovery, and a statement that the financier has no control over litigation decisions.
The bill places substantive limits on litigation financing arrangements. It caps interest rates, limits a financier’s recovery to 25% of any judgment or settlement, prohibits referral fees and misleading advertising, bars financiers from directing legal strategy, and makes financing contracts unenforceable if the chapter is violated. It also requires disclosure of litigation financing contracts to opposing parties, courts, and certain indemnitors or insurers, and makes the existence of such contracts discoverable.
A major part of the bill addresses foreign influence and national security. It prohibits foreign adversaries and foreign persons of concern from engaging in litigation financing in Idaho, bars them from investing in or controlling Idaho litigation financiers, and restricts disclosure of proprietary information to those entities. It also requires additional reporting to the secretary of state when a litigation financier has foreign affiliations or funding sources.
The bill’s impact on state law would be to add a comprehensive regulatory framework to Title 48 of the Idaho Code for litigation funding transactions, with the secretary of state given oversight and rulemaking authority. It would affect litigation financiers, consumers seeking funding for claims, attorneys, class action representatives, and foreign-linked entities, while also creating new disclosure, compliance, and enforcement obligations. The act applies to legal claims pending or commenced on or after July 1, 2026.
The available context shows no recorded committee testimony or votes, so there is no documented public debate in the provided materials. Based on the bill text, the overall tone appears protective and regulatory, emphasizing transparency, consumer safeguards, and national security concerns. Likely points of contention would include the breadth of disclosure requirements, the limits on financing terms and recovery, the class-action fiduciary-duty language, and the restrictions on foreign persons and foreign-linked capital.
The bill would amend Title 48 of the Idaho Code by adding a new chapter regulating litigation financing, creating registration, disclosure, contract, and enforcement requirements for litigation financiers. It would also authorize the secretary of state to oversee the industry, adopt rules, and maintain public registration records, while making noncompliant contracts unenforceable and subjecting excessive interest charges to usury penalties. The law would affect litigation funders, consumers, attorneys, class actions, and foreign persons or entities with ties to foreign adversaries or foreign persons of concern.
No votes or committee transcripts were provided, so there is no direct record of legislative debate or public testimony in the supplied materials. The bill’s framing suggests a generally supportive posture toward consumer protection, transparency, and national security, with the sponsor committee presenting the measure as a regulatory safeguard rather than a prohibition on litigation financing itself.
The most likely areas of contention are the bill’s extensive disclosure and registration requirements, the 25% cap on financier recovery, the interest-rate limitation, and the prohibition on financiers influencing litigation strategy. Additional controversy may arise from the foreign-adversary restrictions, the ban on proprietary-information sharing with certain foreign-linked persons, and the fiduciary-duty language imposed in class actions. Attorneys, litigation finance firms, and foreign-investment interests may view these provisions as burdensome, while supporters are likely to argue they are necessary to protect consumers and prevent foreign influence.