Illinois General Assembly - Full Text of SB3169
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Full Text of SB3169  98th General Assembly




State of Illinois
2013 and 2014


Introduced 2/11/2014, by Sen. William R. Haine


New Act
5 ILCS 80/4.25
205 ILCS 670/21  from Ch. 17, par. 5427
815 ILCS 505/2Z  from Ch. 121 1/2, par. 262Z

    Creates the Non-Recourse Civil Litigation Funding Act. Provides that all contracts for non-recourse civil litigation funding shall be written, provide the total funding amount to the customer, itemize one-time fees, allow the customer to cancel contract within 10 business days following receipt of the funding amount without penalty or further obligation, and other specified criteria. Provides that any attorney's fee, Medicare lien, Medicaid lien, or health care provider lien takes priority over any lien of the non-recourse civil litigation funding company. Contains a provision concerning standards and practices of non-recourse civil litigation companies. Provides criteria for non-recourse civil litigation funding companies to receive and retain licenses, the closing of its business or surrendering of the license, and prohibited acts. Contains provisions for enforcement and remedies, rulemaking, bonding, and judicial review. Amends the Regulatory Sunset Act to provide the Non-Recourse Civil Litigation Funding Act to expire on May 31, 2015. Amends the Consumer Installment Loan Act provision concerning the application of the Act to exclude non-recourse civil litigation funding if requested. Amends the Consumer Fraud and Deceptive Business Practices Act to provide that a person who knowingly violates the Non-Recourse Civil Litigation Funding Act commits an unlawful practice. Effective 180 days after becoming law.

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SB3169LRB098 19406 ZMM 54564 b

1    AN ACT concerning business.
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4    Section 1-1. Short title. This Act may be cited as the
5Non-Recourse Civil Litigation Funding Act.
6    Section 1-5. Definitions. In this Act:
7    "Civil litigation funding company" means a person or entity
8that enters into a non-recourse civil litigation funding
9transaction with a consumer. "Civil litigation funding
10company" includes any affiliate or subsidiary of a civil
11litigation funding company; an entity or person who buys a
12whole or partial interest in a non-recourse civil litigation
13funding, acts as an agent to provide a non-recourse civil
14litigation funding from a third party for a fee, or acts as an
15agent for a third party in providing a non-recourse civil
16litigation funding for a fee, regardless of whether approval or
17acceptance by the third party is necessary to create a legal
18obligation for the third party; and any other person or entity
19if the Department determines that the person or entity is
20engaged in a transaction that is in substance a disguised
21non-recourse civil litigation funding or a subterfuge for the
22purpose of avoiding this Act. Notwithstanding anything to the
23contrary contained in this Act, a bank, lender, financing



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1entity, or any other special purpose entity that provides
2financing to a civil litigation funding company or to which a
3civil litigation funding company grants a security interest or
4transfers any rights or interest in a non-recourse civil
5litigation funding shall not cause the bank, lender, financing
6entity, or special purpose entity to be deemed a civil
7litigation funding company. Notwithstanding anything to the
8contrary contained in this Act, an attorney or accountant who
9provides services to a consumer shall not be deemed a civil
10litigation funding company.
11    "Consumer" means a natural person residing or domiciled in
12Illinois or who elects to enter into a transaction under this
13Act in Illinois, whether it be in-person, over the internet, by
14facsimile, or any other electronic means, and who has a pending
15legal claim and is represented by an attorney at the time he or
16she enters into a contract for non-recourse civil litigation
18    "Contract" means a written agreement between a consumer and
19a civil litigation funding company that the civil litigation
20funding company agrees to provide non-recourse civil
21litigation funding to the consumer in compliance with Article
23    "Department" means the Illinois Department of Financial
24and Professional Regulation.
25    "Funding amount" means the dollar amount of funds provided
26to the consumer by the non-recourse civil litigation funding



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1company subsequent to the execution of the contract as
2consideration for the assignment of or purchase of a contingent
3right to receive a portion of the proceeds of the legal claim.
4    "Funding date" means the date on which the funding amount
5is paid to the consumer by the civil litigation funding
7    "Legal claim" means a civil or statutory claim or action.
8    "Licensee" means any civil litigation funding company
9licensed in accordance with Article 3.
10    "Non-recourse civil litigation funding" means a
11transaction of any amount in which a civil litigation funding
12company purchases and a consumer assigns to the civil
13litigation funding company the contingent right to receive a
14portion of the potential proceeds of a settlement, judgment,
15award, or verdict obtained in the consumer's legal claim.
16    "Proceeds" means those funds available for payment to the
17civil litigation funding company that are remaining from any
18settlement, verdict, final judgment, insurance payment, or
19award obtained in the consumer's legal claim after reductions
20are made under Section 2-15 of this Act.
21    "Resolution date" means the date the funding amount plus
22the agreed upon fees from the legal claim are received by the
23civil litigation funding company.
24    "Secretary" means the Illinois Secretary of Financial and
25Professional Regulation.



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Article 2. Non-Recourse Civil Litigation Funding

2    Section 2-5. Contract provisions. All contracts for
3non-recourse civil litigation funding shall be in writing and
4comply with all of the following requirements:
5    (1) The contract shall contain on the front page,
6appropriately headed and in at least 12-point, bold face type,
7a chart that clearly contains the following disclosures:
8        (A) the total funding amount paid to the consumer;
9        (B) an itemization of one-time fees;
10        (C) the total dollar amount of the proceeds assigned by
11    the consumer to the civil litigation funding company, set
12    forth up to 1080 days beginning at the 11th business day
13    after the funding date, then at 31 days after the funding
14    date, 61 days after the funding date, 181 days after the
15    funding date, 361 days after the funding date, and 721 days
16    after the funding date; and
17        (D) a calculation of the annual percentage fee for each
18    180-day interval.
19    The Secretary shall prescribe by rule the format of the
20chart that clearly discloses to the consumer all the
21information in this subsection. Until the Secretary makes such
22a rule, each civil litigation funding company must have a chart
23format approved for distribution by the Secretary.
24    No contract for non-recourse civil litigation funding
25shall be enforceable against the consumer unless it complies



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1entirely with this subsection.
2    (2) The contract shall provide that the consumer may cancel
3the contract within 10 business days following the consumer's
4receipt of the funding amount, without penalty or further
5obligation. The contract shall contain the following notice
6written in at least 12-point, bold face type:
7    "Consumer's right to cancellation: You may cancel this
8    contract without penalty or further obligation within 10
9    business days after the funding date.".
10    The contract must also specify that in order for the
11cancellation to be effective, the consumer must either return
12to the civil litigation funding company the total amount of the
13funding amount by (a) delivering the civil litigation funding
14company's uncashed check to the civil litigation company's
15offices in person within 10 business days after receipt of the
16funding amount, (b) sending a notice of cancellation via
17registered or certified mail and include in the mailing a
18return of the total amount of funding amount in the form of the
19civil litigation funding company's uncashed check within 10
20business days after receipt of the funding amount, or (c)
21sending a registered, certified or cashier's check or money
22order, by insured, registered, or certified United States mail,
23postmarked within 10 business days after receipt of the funding
24amount, to the address specified in the contract for
26    (3) The contract shall contain all of the following



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1statements in at least 12-point, bold face type:
2        "(A) [Insert name of the civil litigation funding
3    company] agrees that it shall have no right to and will not
4    make any decisions with respect to the conduct of the legal
5    claim or any settlement or resolution thereof and that the
6    right to make those decisions remains solely with you and
7    your attorney in the legal claim. [Insert name of the civil
8    litigation funding company] further agrees that it shall
9    have no right to pursue the legal claim on your behalf.
10        (B) [Insert name of the civil litigation funding
11    company] agrees that it shall only accept: (i) an
12    assignment of a contingent right to receive a portion of
13    the potential proceeds; (ii) the contracted return of the
14    funding amount; and (iii) any agreed upon fees. Any agreed
15    upon fees to [insert name of the civil litigation funding
16    company] shall not be determined as a percentage of your
17    recovery from the legal claim but shall be set as a
18    contractually determined amount based upon intervals of
19    time from the funding date through the resolution date.
20    [Insert name of the civil litigation funding company] is
21    not accepting an assignment of your legal claim.
22        (C) [Insert name of the civil litigation funding
23    company] agrees that you may make payments on a funding at
24    any time without additional cost or penalty.".
25    (4) All contracts with the consumer must contain the
26following statement, in plain language in a box with 15-point,



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1bold face type, in all capitalized letters, stating the
9    (5) The contract shall contain the following statement in
10at least 12-point, bold face type located immediately above the
11space where the consumer's signature is required:
12    "Do not sign this Agreement before you read it completely
13    or if it contains any blank spaces. You are entitled to a
14    completely filled-in copy of this Agreement. Before you
15    sign this Agreement you should obtain the advice of an
16    attorney. Depending on the circumstances, you may want to
17    consult a tax, public, or private benefit planning or
18    financial professional. You acknowledge that your attorney
19    in the legal claim has provided no tax, public, or private
20    benefit planning regarding this transaction. You further
21    understand and agree that the funds you receive from
22    [insert name of the civil litigation funding company] shall
23    not be used to pay for or applied to the payment of
24    attorney's fees or litigation costs related to your legal
25    claim.".
26    (6) The executed contract shall contain a written



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1acknowledgment by the consumer that he or she has reviewed the
2contract in its entirety.
3    (7) The non-recourse civil litigation funding company
4shall provide the consumer's attorney with a written
5notification of the non-recourse civil litigation funding
6provided to the consumer 3 business days before the funding
7date by way of postal mail, courier service, facsimile, e-mail
8return receipt acknowledged, or other means of proof of
9delivery method unless there is a written acknowledgment by the
10attorney representing the consumer in the legal claim as to the
11terms of the contract. Notwithstanding notice of the
12non-recourse civil litigation funding, the consumer's attorney
13is not responsible for paying or ensuring payment of the
14consumer's obligation.
15    (8) The contracted return of the funding amount, plus any
16agreed upon fees assigned to the civil litigation funding
17company on the resolution date shall not be determined as a
18percentage of the recovery from the legal claim but shall be
19set as a contractually determined amount based upon intervals
20of time from the funding date through the resolution date.
21    Section 2-10. Contracted fee amount.
22    (a) The civil litigation funding company shall offer the
23consumer the option of either entering into a conventional loan
24under the Consumer Installment Loan Act or entering into a
25non-recourse civil litigation funding.



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1    If the consumer elects to enter into a conventional loan
2agreement under the Consumer Installment Loan Act, the interest
3charged shall not exceed an annual percentage rate of 36%.
4    If the consumer elects to enter into a non-recourse civil
5litigation funding, the company shall not charge a fee in
6excess of 36% annual percentage rate plus a deferment fee not
7to exceed 3% for each month the funding is outstanding with
8compounding to occur no more often than monthly.
9    (b) No additional fees shall be applied for any period of
10time beyond 1080 days from the funding date.
11    (c) Except for the fees set forth in this Section and
12Section 20, the civil litigation funding company shall not
13impose on a consumer any additional finance charges, interest,
14fees, or charges of any sort for any purpose.
15    Section 2-12. Charges permitted.
16    (a) A licensee may charge an acquisition charge not to
17exceed 8% of the amount funded or $100, whichever is less.
18    (b) A licensee may charge an expedited funds delivery
19option charge not to exceed the actual cost of delivery or $20,
20whichever is less. Expedited funds delivery options,
21including, but not limited to, overnight delivery, electronic
22fund transfers, and Automated Clearing House (ACH)
23transactions may be offered to the consumer as a choice of the
24method of the delivery of funds. The fund delivery charge is
25fully earned at the time that each funding transaction is made



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1and shall not be subject to refund. Details and receipts of
2delivery shall be provided in an invoice to the consumer no
3more than 10 business days after the funding date. A no-charge
4delivery option must be offered to the consumer as a choice.
5    Section 2-15. Claim priorities. Any lien arising out of the
6underlying consumer's legal claim for subrogation claims,
7attorney fees, attorney liens, and litigation costs, health
8care providers, employers in worker's compensation
9proceedings, health insurers, employers with self-funded
10health care plans, Medicare, and Public Aid shall be satisfied
11before and take priority over any claim of the civil litigation
12funding company. All other holders of liens, security
13interests, or subrogation claims shall take priority over the
14civil litigation funding company to the extent allowed by law.
15    Section 2-20. Standards and practices. Each civil
16litigation funding company shall adhere to the following:
17    (1) The civil litigation funding company shall not pay or
18offer to pay any compensation to any attorney, law firm,
19medical provider, chiropractor, physical therapist, or any of
20their employees for referring a consumer to the civil
21litigation funding company. The civil litigation funding
22company agrees not to accept any compensation from any
23attorney, law firm, medical provider, chiropractor, physical
24therapist, or any of their employees, other than the funding



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1amount and any agreed upon fees the consumer assigned to the
2civil litigation funding company out of the potential proceeds
3of the legal claim. If a lawyer or law firm represents one or
4more consumers with outstanding civil litigation fundings from
5the same civil litigation funding company, that civil
6litigation funding company may not provide any type of funding
7to the lawyer or law firm.
8    (2) The civil litigation funding company shall not
9advertise false or intentionally misleading information
10regarding its product or services.
11    (3) The civil litigation funding company shall not
12knowingly provide funding to a consumer who has previously sold
13and assigned an amount of the potential proceeds of his or her
14legal claim to another civil litigation funding company without
15first purchasing that civil litigation funding company's
16entire accrued balance unless otherwise agreed to in writing by
17the consumer and all civil litigation funding companies that
18provided non-recourse civil litigation funding to the
20    (4) The civil litigation funding company shall not offer
21single premium credit life, disability, or unemployment
22insurance that will be financed through a non-recourse civil
23litigation funding transaction.
24    (5) For non-English speaking consumers, the principal
25terms of the contract must be translated in writing into the
26consumer's primary language. The consumer must sign the



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1translated document containing the principal terms and initial
2each page and the translator must sign an affirmation
3confirming that the principal terms have been presented to the
4consumer in the consumer's primary language and acknowledged by
5the consumer. Principal terms shall include all items that must
6be disclosed by Section 2-5.
7    (6) The civil litigation funding company shall not
8knowingly enter into a non-recourse civil litigation funding
9contract with a consumer where the consumer's legal claim is a
10pending class action lawsuit at the time of the funding. The
11civil litigation funding company may not discuss a consumer's
12choice to join a class action lawsuit other than to confirm
13that a consumer has or has not chosen to join a class action
14lawsuit. Should any legal claim in which a plaintiff has
15received non-recourse civil litigation funding become a class
16action matter, no further funding shall be permitted. The civil
17litigation funding company is prohibited from advancing,
18loaning, assigning, or otherwise providing funds, directly or
19indirectly, to any attorney, law firm, or related entity for
20the purposes of researching, investigating, developing,
21prosecuting, or otherwise representing parties in class action
22mass tort litigation.
23    (7) An attorney or law firm shall not have a financial
24interest in the civil litigation funding company providing
25non-recourse civil litigation funding to a consumer
26represented by that attorney or law firm.



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1    (8) No communication between a consumer's attorney and a
2civil litigation funding company pertaining to a consumer's
3non-recourse civil litigation funding transaction shall limit,
4waive, or abrogate any statutory or common-law privilege,
5including the attorney-client privilege or the work-product
7    (9) The return of the funding amount to the civil
8litigation funding company, plus any agreed upon fees, shall be
9rendered only out of the proceeds, if any, of the realized
10settlement, judgment, award, or verdict the consumer may
11receive from the legal claim. Under no circumstances shall the
12civil litigation funding company have recourse for the funding
13amount beyond the consumer's proceeds from the legal claim.
14    (10) The civil litigation funding company shall have no
15authority to make any decisions with respect to the conduct of
16the litigation of the legal claim or any settlement or
17resolution thereof. The right to make those decisions remains
18solely with the consumer and the consumer's attorney
19representing the consumer in the legal claim. The civil
20litigation funding company shall have no right to pursue the
21legal claim on the consumer's behalf.
22    (11) The civil litigation funding company shall only accept
23an assignment of a contingent right to receive a portion of the
24potential proceeds, rather than an assignment of the legal
25claim. The contracted return of the funding amount, plus any
26agreed upon fees assigned to the civil litigation funding



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1company, shall not be determined as a percentage of the total
2recovery from the legal claim, but shall be set as a
3contractually determined amount based upon intervals of time
4from the funding date through the resolution date.
5    (12) Notwithstanding subsection (9) of this Section, the
6civil litigation funding company shall allow the consumer to
7make payments on a funding at any time without additional cost
8or penalty.
9    (13) Contact between the civil litigation funding company
10and the consumer shall be subject to the following limitations:
11        (A) Neither a civil litigation funding company, nor any
12    person acting on behalf of a civil litigation funding
13    company, shall contact a consumer prior to the consumer
14    obtaining legal representation and initiating a legal
15    claim.
16        (B) Neither a civil litigation funding company, nor any
17    person acting on behalf of a civil litigation funding
18    company, shall contact the consumer after the funding date
19    in order to influence any decisions with respect to the
20    conduct of the legal claim or any settlement or resolution
21    thereof. Notwithstanding the foregoing, the civil
22    litigation funding company may contact the consumer or the
23    consumer's attorney to obtain the status of the legal claim
24    and may contact the consumer after the funding date to
25    obtain updated attorney contact information.
26        (C) After the resolution date, neither a civil



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1    litigation funding company, nor any person acting on behalf
2    of a civil litigation funding company, shall seek to
3    collect additional funds or threaten civil action for any
4    deficiency.
5    Section 2-25. Information; reporting and examination.
6    (a) A licensee shall keep and use books, accounts, and
7records that will enable the Secretary to determine if the
8licensee is complying with the provisions of this Act and
9maintain any other records as required by the Secretary.
10    (b) A licensee shall collect and maintain information
11annually for a report that shall disclose in detail and under
12appropriate headings:
13        (1) the total number of non-recourse civil litigation
14    fundings made during the previous calendar year;
15        (2) the total number of non-recourse civil litigation
16    fundings outstanding as of December 31st of the preceding
17    calendar year;
18        (3) the minimum, maximum, and average amount of
19    non-recourse civil litigation fundings made during the
20    preceding calendar year;
21        (4) the average annual fee rate of the non-recourse
22    civil litigation fundings made during the preceding year;
23    and
24        (5) the total number of non-recourse civil litigation
25    funding transactions in which the civil litigation funding



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1    company received the return of the funding amount, plus any
2    agreed upon fees; the total number of non-recourse civil
3    litigation funding transactions for which the civil
4    litigation funding company received no return of the
5    funding amount or any fees; and the total number of
6    non-recourse civil litigation funding transactions in
7    which the civil litigation funding company received an
8    amount less than the contracted amount.
9    The report shall be verified by the oath or affirmation of
10the Chief Executive Officer, Chief Financial Officer, or other
11duly authorized representative of the licensee. The report must
12be filed with the Secretary no later than March 1 of the year
13following the year for which the report discloses the
14information specified in this subsection (b). The Secretary may
15impose a fine of $50 per day upon the licensee for each day
16beyond the filing deadline that the report is not filed.
17    (c) The Department shall have the authority to conduct
18examinations at any time of the books, records, and
19non-recourse civil litigation funding documents of a licensee
20or other company or person doing business without the required
21license. Any licensee being examined must provide to the
22Department convenient and free access at all reasonable hours
23at its office or location to all books, records, non-recourse
24civil litigation funding documents. The officers, directors,
25and agents of the litigation funding company must facilitate
26the examination and aid in the examination so far as it is in



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1their power to do so.
2    Section 2-30. Applicability.
3    (a) The contingent right to receive a portion of the
4potential proceeds of a legal claim is assignable and valid for
5the purposes of obtaining funding from a licensee under this
7    (b) Nothing in this Act shall cause any non-recourse civil
8litigation funding transaction conforming to this Act to be
9deemed to be a "loan or investment contract" or subject to the
10restrictions or provisions governing loans or investment
11contracts set forth in the Interest Act, the Consumer
12Installment Loan Act, or other provisions of Illinois law.
Article 3. Licensure.

14    Section 3-1. Licensure requirement.
15    (a) Except as provided in subsection (b), on and after the
16effective date of this Act, a civil litigation funding company
17as defined by Section 1-5 must be licensed by the Department as
18provided in this Article.
19    (b) A civil litigation funding company licensed on the
20effective date of this Act under the Consumer Installment Loan
21Act need not comply with subsection (a) until the Department
22takes action on the civil litigation funding company's
23application for a non-recourse civil litigation funding



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1license. The application must be submitted to the Department
2within 3 months after the effective date of this Act. If the
3application is not submitted within 3 months after the
4effective date of this Act, the civil litigation funding
5company is subject to subsection (a).
6    Section 3-5. Licensure.
7    (a) An application for a license shall be in writing and in
8a form prescribed by the Secretary. Applicants must also submit
9a non-refundable application fee of $1,500, due at the time of
10the application. The Secretary may not issue a non-recourse
11civil litigation funding license unless and until the following
12findings are made:
13        (1) that the financial responsibility, experience,
14    character, and general fitness of the applicant are such as
15    to command the confidence of the public and to warrant the
16    belief that the business will be operated lawfully and
17    fairly and within the provisions and purpose of this Act;
18        (2) that the applicant has submitted such other
19    information as the Secretary may deem necessary; and
20        (3) that the applicant is a current licensee under the
21    Consumer Installment Loan Act.
22    (b) A license shall be issued for no longer than one year
23and no renewal of a license may be provided if a licensee has
24substantially violated this Act and has not cured the violation
25to the satisfaction of the Department.



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1    (c) A licensee shall appoint, in writing, the Secretary as
2attorney-in-fact upon whom all lawful process against the
3licensee may be served with the same legal force and validity
4as if served on the licensee. A copy of the written
5appointment, duly certified, shall be filed in the office of
6the Secretary, and a copy thereof certified by the Secretary
7shall be sufficient evidence to subject a licensee to
8jurisdiction in a court of law. This appointment shall remain
9in effect while any liability remains outstanding in this State
10against the licensee. When summons is served upon the Secretary
11as attorney-in-fact for a licensee, the Secretary shall
12immediately notify the licensee by registered mail, enclosing
13the summons and specifying the day of service.
14    (d) A licensee must pay an annual fee of $1,000. In
15addition to the annual license fee, the reasonable expense of
16any examination or hearing by the Secretary under any
17provisions of this Act shall be borne by the licensee. If a
18licensee fails to submit an application for renewal by December
1931st of the then current year, its license shall automatically
20expire; however, the Secretary, in his or her discretion, may
21reinstate an expired license upon:
22        (1) payment of the annual fee within 30 days of the
23    date of expiration; and
24        (2) proof of good cause for failure to renew.
25        (3) that the applicant is a current licensee under the
26    Consumer Installment Loan Act.



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1    (e) No licensee shall conduct the business of providing
2non-recourse civil litigation funding under this Act within any
3office, suite, room, or place of business in which any other
4business is solicited or engaged unless the other business is
5licensed by the Department and, in the opinion of the
6Secretary, the other business would not be contrary to the best
7interests of consumers and is authorized by the Secretary in
9    (f) The Secretary shall maintain a list of licensees that
10shall be available to interested consumers and lenders and the
11public. The Secretary shall maintain a toll-free number whereby
12consumers may obtain information about licensees. The
13Secretary shall also establish a complaint process under which
14an aggrieved consumer may file a complaint against a licensee
15or non-licensee who violates any provision of this Act.
16    Section 3-10. Closing of business; surrender of license. At
17least 10 days before a licensee ceases operations, closes the
18business, or files for bankruptcy, the licensee shall:
19    (1) Notify the Department of its intended action in
21    (2) With the exception of filing for bankruptcy, surrender
22its license to the Secretary for cancellation. The surrender of
23the license shall not affect the licensee's civil or criminal
24liability for acts committed before or after the surrender or
25entitle the licensee to a return of any part of the annual



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1license fee.
2    (3) Notify the Department of the location where the books,
3accounts, contracts, and records will be maintained.
4    The accounts, books, records, and contracts shall be
5maintained and serviced by the licensee, by another licensee
6under this Act, or by the Department.
Article 4. Administrative Provisions

8    Section 4-5. Prohibited acts. A licensee or unlicensed
9person or entity entering into non-recourse civil litigation
10funding may not commit, or have committed, on behalf of the
11licensee or unlicensed person or entity, any of the following
13    (1) Threatening to use or using the criminal process in
14this or any other state to collect the assignment.
15    (2) Using any device or agreement that would have the
16effect of charging or collecting more fees or charges than
17allowed in this Act, including, but not limited to, entering
18into a different type of transaction with the consumer.
19    (3) Engaging in unfair, deceptive, or fraudulent practices
20related to the non-recourse civil litigation funding.
21    (4) Threatening to take any action against a consumer that
22is prohibited by this Act or making any misleading or deceptive
23statements regarding the non-recourse civil litigation



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1    (5) Making a misrepresentation of a material fact by an
2applicant for licensure in obtaining or attempting to obtain a
4    (6) Including any of the following provisions in
5non-recourse civil litigation funding contracts:
6        (A) a confession of judgment clause;
7        (B) a mandatory arbitration clause that is oppressive,
8    unfair, unconscionable, or substantially in derogation of
9    the rights of consumers; or
10        (C) a provision that the consumer agrees not to assert
11    any claim or defense arising out of the contract.
12    (7) Taking any power of attorney.
13    Section 4-10. Enforcement and remedies.
14    (a) The remedies provided in this Act are cumulative and
15apply to persons or entities subject to this Act.
16    (b) Any material violation of this Act, including the
17commission of an act prohibited under Section 4-5, constitutes
18a violation of the Consumer Fraud and Deceptive Business
19Practices Act.
20    (c) If any provision of the written agreement described in
21Section 2-5 violates this Act, then that provision is
22unenforceable against the consumer.
23    (d) Subject to the Illinois Administrative Procedure Act,
24the Secretary may hold hearings, make findings of fact,
25conclusions of law, issue cease and desist orders, have the



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1power to issue fines of up to $10,000 per violation, refer the
2matter to the appropriate law enforcement agency for
3prosecution under this Act, and suspend or revoke a license
4granted under this Act. All proceedings shall be open to the
6    (e) The Secretary may issue a cease and desist order to any
7licensee or other person doing business without the required
8license, when in the opinion of the Secretary the licensee or
9other person is violating or is about to violate any provisions
10of this Act or any rule or requirement imposed in writing by
11the Department as a condition of granting any authorization
12permitted by this Act. In addition to any other action
13authorized by this Act, if the Secretary determines that a
14civil litigation funding company is engaged in or is believed
15to be engaged in activities that may constitute a violation of
16this Act and the Secretary is able to show that an emergency
17exists, the Secretary may suspend the civil litigation funding
18company's license for a period not exceeding 180 calendar days.
19The cease and desist order and emergency suspension permitted
20by this subsection (e) may be issued prior to a hearing.
21    The Secretary shall serve notice of his or her action,
22including, but not limited to, a statement of the reasons for
23the action, either personally or by certified mail, return
24receipt requested. Service by certified mail shall be deemed
25completed when the notice is deposited in the U.S. Mail.
26    Within 10 business days after service of the cease and



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1desist order, the licensee or other person may request a
2hearing in writing. The Secretary shall schedule a hearing
3within 30 days after the request for a hearing unless otherwise
4agreed to by the parties. The Secretary shall have the
5authority to adopt rules for the administration of this
7    If it is determined that the Secretary had the authority to
8issue the cease and desist order, he or she may issue such
9orders as may be reasonably necessary to correct, eliminate, or
10remedy the conduct.
11    The powers vested in the Secretary by the subsection (e)
12are additional to any and all other powers and remedies vested
13in the Secretary by law, and nothing in this subsection (e)
14shall be construed as requiring that the Secretary shall employ
15the power conferred in this subsection instead of or as a
16condition precedent to the exercise of any other power or
17remedy vested in the Secretary.
18    (f) The Secretary may, after 10 business days notice by
19registered mail to the licensee at the address set forth in the
20license stating the contemplated action an in general the
21grounds therefore, fine the licensee an amount not exceeding
22$10,000 per violation, or revoke or suspend any license issued
23by the Department if found that:
24        (1) the licensee has failed to comply with any
25    provision of this Act or any order, decision, finding,
26    rule, regulation, or direction of the Secretary lawfully



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1    made under the authority of this Act; or
2        (2) any fact or condition exists that, if it had
3    existed at the time of the original application for the
4    license, clearly would have warranted the Secretary in
5    refusing to issue the license.
6        No revocation, suspension, or surrender of any license
7    shall impair or affect the obligation of any pre-existing
8    lawful contract between the civil litigation company and a
9    consumer.
10        The Secretary may issue a new license to a licensee
11    whose license has been revoked when facts or conditions
12    that clearly would have warranted the Secretary in refusing
13    originally to issue the license no longer exist.
14        In every case in which a license or renewal of a
15    license is denied, the Secretary shall serve the licensee
16    with notice of his or her action, including a statement of
17    the reasons for his or her actions, either personally, or
18    by certified mail, return receipt requested. Service by
19    certified mail shall be deemed completed when the notice is
20    deposited in the U.S. Mail.
21        An order assessing a fine, an order revoking or
22    suspending a license, or an order denying or refusing to
23    renew a license shall take effect upon service of the order
24    unless the licensee requests a hearing, in writing, within
25    10 days after the date of service. In the event a hearing
26    is requested, the order shall be stayed until final



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1    administrative order is entered.
2        If the licensee requests a hearing, the Secretary shall
3    schedule a hearing within 30 days after the request for a
4    hearing unless otherwise agreed to by the parties.
5        The hearing shall be held at a time and place
6    designated by the Secretary. The Secretary, and any
7    administrative law judge designated by him or her, shall
8    have the power to administer oaths and affirmations,
9    subpoena witnesses and compel their attendance, take
10    evidence, and require the production of books, papers,
11    correspondence, and other records or information that he or
12    she considers relevant or material to the inquiry.
13        The costs of administrative hearings conducted under
14    this Section shall be paid by the licensee.
15    (g) All moneys received by the Department under this Act
16shall be deposited in the Financial Institutions Fund.
17    Section 4-15. Bonding.
18    (a) A person or entity engaged in non-recourse civil
19litigation funding under this Act shall post a bond to the
20Department in the amount of $50,000 per license or irrevocable
21letter of credit issued and confirmed by a financial
22institution authorized by law to transact business in the State
23of Illinois.
24    (b) A bond posted under subsection (a) must continue in
25effect for the period of licensure and for 3 additional years



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1if the bond is still available. The bond must be available to
2pay damages and penalties to be a consumer harmed by a
3violation of this Act.
4    (c) From time to time the Secretary may require a licensee
5to file a bond in an additional sum if the Secretary determines
6it to be necessary. In no case shall the bond be more than the
7outstanding liabilities of the licensee.
8    Section 4-20. Reporting of violations. The Department
9shall report to the Attorney General all material violations of
10this Act of which it becomes aware.
11    Section 4-25. Rulemaking.
12    (a) The Department may make and enforce such reasonable
13rules, regulations, directions, orders, decisions, and
14findings as the execution and enforcement of the provisions of
15this Act require, and as are not inconsistent therewith. All
16rules, regulations, and directions of a general character shall
17be made available to all licensees in an electronic format.
18    (b) The Department may adopt rules in connection with the
19activities of licensees that are necessary and appropriate for
20the protection of the consumers in this State. These rules
21shall be consistent with this Act.
22    Section 4-28. Confidentiality. All information collected
23by the Department under an examination or investigation of a



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1civil litigation funding company, including, but not limited
2to, information collected to investigate any complaint against
3a civil litigation funding company filed with the Department,
4shall be maintained for the confidential use of the Department
5and shall not be disclosed. The Department may not disclose
6such information to anyone other than the licensee, law
7enforcement officials, or other regulatory agencies that have
8an appropriate regulatory interest as determined by the
9Secretary, or to a party presenting a lawful subpoena to the
10Department. Information and documents disclosed to a federal,
11State, county, or local law enforcement agency shall not be
12disclosed by the agency for any purpose to any other agency or
13person. An order issued by the Department against a civil
14litigation funding company shall be a public record and any
15documents produced in discovery, filed with the administrative
16law judge, or introduced at hearing shall be a public record,
17except as otherwise prohibited by law.
18    Section 4-30. Judicial review. All final administrative
19decisions of the Department under this Act are subject to
20judicial review under the provisions of the Administrative
21Review Law and any rules adopted pursuant thereto.
22    Section 4-35. Waivers. There shall be no waiver of any
23provision of this Act.



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1    Section 4-40. Superiority of Act. To the extent this Act
2conflicts with any other State laws, this Act is superior and
3supersedes those laws for the purposes of regulating
4non-recourse civil litigation funding in Illinois.
5    Section 4-45. Severability. The provisions of this Act are
6severable under Section 1.31 of the Statute of Statutes.
7    Section 4-48. Consumer protection study. The Department
8shall conduct a study to be reported to the Governor and the
9leaders of the General Assembly no later than February 1, 2015,
10addressing the adequacy of the consumer protections contained
11in this Act. The study shall include, but not be limited to:
12(1) an analysis of the average percentage of a consumer's
13settlement that is used to return the funding amount in each
14transaction; (2) a survey of consumer complaints filed against
15civil litigation funding companies; (3) a description of the
16benefits and shortcomings of non-recourse civil litigation
17funding to consumers; and (4) any reforms that the Secretary
18recommends to better regulate civil litigation funding
Article 90. Amendatory Provisions

21    Section 90-1. The Regulatory Sunset Act is amended by
22changing Section 4.25 as follows:



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1    (5 ILCS 80/4.25)
2    Sec. 4.25. Acts Act repealed on January 1, 2015 and May 31,
4    (a) The following Act is repealed on January 1, 2015:
5    The Genetic Counselor Licensing Act.
6    (b) The following Act is repealed on May 31, 2015:
7    The Non-Recourse Civil Litigation Funding Act.
8(Source: P.A. 93-1041, eff. 9-29-04.)
9    Section 90-5. The Consumer Installment Loan Act is amended
10by changing Section 21 as follows:
11    (205 ILCS 670/21)  (from Ch. 17, par. 5427)
12    Sec. 21. Application of Act. This Act does not apply to any
13person, partnership, association, limited liability company,
14or corporation doing business under and as permitted by any law
15of this State or of the United States relating to banks,
16savings and loan associations, savings banks, credit unions, or
17licensees under the Residential Mortgage License Act for
18residential mortgage loans made pursuant to that Act. This Act
19does not apply to business loans. This Act does not apply to
20payday loans. Except as provided in Section 2-10 of the
21Non-Recourse Civil Litigation Funding Act, this Act does not
22apply to non-recourse civil litigation funding.
23(Source: P.A. 94-13, eff. 12-6-05.)



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1    Section 90-10. The Consumer Fraud and Deceptive Business
2Practices Act is amended by changing Section 2Z as follows:
3    (815 ILCS 505/2Z)  (from Ch. 121 1/2, par. 262Z)
4    Sec. 2Z. Violations of other Acts. Any person who knowingly
5violates the Automotive Repair Act, the Automotive Collision
6Repair Act, the Home Repair and Remodeling Act, the Dance
7Studio Act, the Physical Fitness Services Act, the Hearing
8Instrument Consumer Protection Act, the Illinois Union Label
9Act, the Job Referral and Job Listing Services Consumer
10Protection Act, the Travel Promotion Consumer Protection Act,
11the Credit Services Organizations Act, the Automatic Telephone
12Dialers Act, the Pay-Per-Call Services Consumer Protection
13Act, the Telephone Solicitations Act, the Illinois Funeral or
14Burial Funds Act, the Cemetery Oversight Act, the Cemetery Care
15Act, the Safe and Hygienic Bed Act, the Pre-Need Cemetery Sales
16Act, the High Risk Home Loan Act, the Payday Loan Reform Act,
17the Mortgage Rescue Fraud Act, subsection (a) or (b) of Section
183-10 of the Cigarette Tax Act, subsection (a) or (b) of Section
193-10 of the Cigarette Use Tax Act, the Electronic Mail Act, the
20Internet Caller Identification Act, paragraph (6) of
21subsection (k) of Section 6-305 of the Illinois Vehicle Code,
22Section 11-1431, 18d-115, 18d-120, 18d-125, 18d-135, 18d-150,
23or 18d-153 of the Illinois Vehicle Code, Article 3 of the
24Residential Real Property Disclosure Act, the Automatic



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1Contract Renewal Act, the Non-Recourse Civil Litigation
2Funding Act, or the Personal Information Protection Act commits
3an unlawful practice within the meaning of this Act.
4(Source: P.A. 96-863, eff. 1-19-10; 96-1369, eff. 1-1-11;
596-1376, eff. 7-29-10; 97-333, eff. 8-12-11.)
6    Section 99. Effective date. This Act takes effect 180 days
7after becoming law.