COURTS AND CIVIL PROCEDURE -- PROCEDURE GENERALLY -- LITIGATION LENDING AGREEMENTS, the official text

S3196 2026 -- S 3196 ======== LC005225 ======== STATE OF RHODE ISLAND IN GENERAL ASSEMBLY JANUARY SESSION, A.D. 2026 ____________ A N A C T RELATING TO COURTS AND CIVIL PROCEDURE -- PROCEDURE GENERALLY -- LITIGATION LENDING AGREEMENTS Introduced By: Senators McKenney, and LaMountain Date Introduced: April 03, 2026 Referred To: Senate Judiciary It is enacted by the General Assembly as follows: 1 SECTION 1. Title 9 of the General Laws entitled COURTS AND CIVIL PROCEDURE 2 -- PROCEDURE GENERALLY is hereby amended by adding thereto the following chapter: 3 CHAPTER 3.1 4 LITIGATION LENDING AGREEMENTS 5 9-3.1-1. Legislative findings. 6 The general assembly finds and declares that: 7 (1) Litigation financing contracts are being entered into where companies advance money 8 to a litigant in return for payment from litigation proceeds at effective annual interest rates far 9 exceeding state usury limits; and 10 (2) These contracts often bear annual interest rates which exceed one hundred percent 11 (100%); and 12 (3) These rates are detrimental to the general welfare of the citizens of this state and it is 13 necessary to enact legislation to ensure that litigation-funding advances conform to state laws 14 governing usurious loans. 15 9-3.1-2. Litigation lending agreement defined. 16 A litigation lending agreement (LLA) is any agreement whereby monies are paid to 17 parties to civil litigation (litigants) in consideration for a litigant s agreement to repay these monies 18 (with or without interest, one-time charges, use fees, or any other add-on charges) from the proceeds 1 of the litigation. Not included in the definition of an LLA are advancements of expenses of litigation 2 made by attorneys on behalf of their clients, as permitted by rule 1.8(e) of the Rhode Island rules 3 of professional conduct. 4 9-3.1-3. Litigation advances considered loans pursuant to state usury law. 5 All payments made by a litigant under an LLA greater than the amount received by the 6 litigant under the LLA shall be considered interest on loans subject to the provisions of chapter 26 7 of title 6 ( interest and usury ) regardless of: 8 (1) Whether an LLA characterizes itself as a loan, an advance, an investment, an 9 assignment of proceeds, or any other characterization; 10 (2) Whether monies to be repaid under the LLA are called interest, use fees, or any 11 other term; 12 (3) Whether the amount received by the litigant under the LLA otherwise exceeds any 13 monetary limit for loans and interest rates falling within the provisions of chapter 26 of title 6; and 14 (4) Whether the obligation on the part of the litigant to repay monies is contingent upon a 15 particular outcome of the litigation. 16 SECTION 2. This act shall take effect upon passage. ======== LC005225 ======== LC005225 - Page 2 of 3 EXPLANATION BY THE LEGISLATIVE COUNCIL OF A N A C T RELATING TO COURTS AND CIVIL PROCEDURE -- PROCEDURE GENERALLY -- LITIGATION LENDING AGREEMENTS *** 1 This act would make litigation loan agreements subject to state usury laws. 2 This act would take effect upon passage. ======== LC005225 ======== LC005225 - Page 3 of 3