Requires funds received by NJ from lawsuits in which AG participated be held in escrow by certain financial institutions.
Assembly Bill 5163 would require that at least 50 percent of money recovered by the State or another public entity in litigation involving the Attorney General be deposited in escrow, trust, or custody accounts at certain approved New Jersey financial institutions. The covered proceeds include damages, civil fines, restitution, settlement funds, and other litigation-related recoveries. The Attorney General, in consultation with the State Treasurer, would be responsible for directing these deposits.
To qualify, a financial institution must be authorized to do business in New Jersey, be listed by the Department of Banking and Insurance as approved for this purpose, provide escrow/trust/custody services, maintain at least $1 billion in total deposits, hold at least 15 percent of its deposits in New Jersey, and not receive litigation proceeds exceeding 10 percent of its total deposits. The department would also maintain a directory of approved institutions, and banks already approved by the New Jersey Supreme Court to hold attorney trust accounts would be presumptively approved under this bill.
The bill would add a new statutory requirement in Title 52 governing how litigation recoveries obtained by the State or its political subdivisions are handled, limiting where at least half of those funds may be deposited. It would create a role for the Department of Banking and Insurance in approving and listing eligible financial institutions and would require coordination between the Attorney General and the State Treasurer. The measure would not change the underlying ability of the State to recover funds in litigation, but it would direct the custody of those proceeds and favor larger New Jersey-based institutions that meet the bill’s criteria.
No committee transcripts or recorded votes were provided, so there is no direct evidence of legislative debate or floor sentiment. Based on the bill text and sponsor statement, the measure appears to be framed as an administrative and comity-based requirement, modeled on existing attorney trust account rules, rather than a controversial policy change. The sponsor’s explanation suggests the bill is intended to align state practice with rules already applied to private attorneys.
The main points of potential contention are the bill’s preference for certain financial institutions and the restriction that only institutions meeting specific size and in-state deposit thresholds may hold these funds. Critics could question whether the requirements unnecessarily limit competition or reduce flexibility in managing large litigation recoveries, while supporters may view them as a way to keep public funds in New Jersey institutions and ensure secure custody. Another possible issue is the bill’s application only to funds recoverable by the Attorney General in multi-jurisdictional, class action, or mass tort matters, which could raise questions about scope and administration.