Rhode Island House Bill H7751

Rhode Island 2026 Regular Session

• Introduced: 2/12/26
• Refer: 2/12/26

Caption

RELATING TO COURTS AND CIVIL PROCEDURE -- PROCEDURE GENERALLY --, LITIGATION LENDING AGREEMENTS

Summary

H7751 creates a new chapter in Rhode Island law governing “litigation lending agreements” (LLAs), which are arrangements where a company advances money to a civil litigant in exchange for repayment from any litigation proceeds. The bill’s findings state that these products often carry very high effective annual interest rates, sometimes above 100%, and that they can be harmful to the public welfare. The legislation is aimed at ensuring that these transactions are treated consistently with Rhode Island’s existing usury laws. The bill defines an LLA broadly to cover most agreements in which a litigant receives money now and agrees to repay more than the amount received from the lawsuit recovery, regardless of how the transaction is labeled. It specifically excludes attorney advances for litigation expenses that are permitted under Rhode Island Rule of Professional Conduct 1.8(e). Under the bill, any amount paid by the litigant above the amount received is deemed interest on a loan and is subject to chapter 26 of title 6, Rhode Island’s interest and usury statute, even if the agreement is described as an investment, assignment of proceeds, or contingent repayment arrangement.

Impact

If enacted, the bill would extend Rhode Island usury law to litigation funding transactions and prevent providers from avoiding interest-rate limits by using alternative labels or contingent repayment structures. It would affect litigation finance companies, plaintiffs in civil cases who seek cash advances, and potentially attorneys only to the extent their expense advances remain exempt. The measure would add a new statutory chapter in title 9 and make clear that litigation-funding charges are to be analyzed as loan interest for purposes of state law.

Sentiment

The bill text reflects a strongly skeptical view of litigation funding, describing it as a practice that can impose excessive costs on vulnerable litigants and should be brought within existing consumer-protection-style usury limits. No committee transcript or vote record is available, so there is no documented floor or committee debate in the provided materials. Based on the bill’s findings and caption, the overall posture is protective of litigants and restrictive toward litigation finance providers.

Contention

The main point of contention is likely whether litigation funding should be regulated as a loan subject to usury caps or treated as a distinct financial product tied to litigation risk. Supporters would emphasize high effective rates, consumer protection, and transparency, while opponents may argue that these agreements are contingent, nonrecourse, and not traditional loans, and that strict usury treatment could reduce access to funding for plaintiffs awaiting case resolution. The bill also draws a line between third-party litigation finance and attorney-provided expense advances, preserving the latter as an exception.