Adds to existing law to establish the Litigation Financing Transparency, National Security, and Consumer Protection Act.

LEGISLATURE OF THE STATE OF IDAHO Sixty-eighth Legislature Second Regular Session - 2026 IN THE HOUSE OF REPRESENTATIVES HOUSE BILL NO. 646 BY BUSINESS COMMITTEE AN ACT1 RELATING TO THE LITIGATION FINANCING TRANSPARENCY, NATIONAL SECURITY, AND2 CONSUMER PROTECTION ACT; AMENDING TITLE 48, IDAHO CODE, BY THE ADDITION3 OF A NEW CHAPTER 21, TITLE 48, IDAHO CODE, TO PROVIDE A SHORT TITLE,4 TO DEFINE TERMS, TO REQUIRE CERTAIN REGISTRATION, TO ESTABLISH LIT-5 IGATION FINANCING PROTECTIONS, TO PROVIDE FOR LITIGATION FINANCING6 CONTRACTS AND DISCLOSURES, TO PROVIDE FOR DISCLOSURE AND DISCOVERY OF7 LITIGATION FINANCING CONTRACTS, TO ESTABLISH EXEMPTIONS, TO PROVIDE8 CERTAIN APPLICABILITY REGARDING CLASS ACTIONS, TO PROVIDE FOR CERTAIN9 JOINT AND SEVERAL LIABILITY, TO PROHIBIT LITIGATION FUNDING BY FOR-10 EIGN ADVERSARIES, TO RESTRICT DISCLOSURE OF PROPRIETARY INFORMATION,11 TO ESTABLISH LIMITATIONS ON FOREIGN LITIGATION FUNDING, TO PROVIDE12 FOR THE REGISTRATION AND TRANSPARENCY OF FOREIGN PERSONS, TO PROVIDE13 FOR REGULATORY OVERSIGHT, TO ESTABLISH PROVISIONS REGARDING CHAPTER14 VIOLATIONS, AND TO PROVIDE FOR CHAPTER APPLICABILITY; PROVIDING SEVER-15 ABILITY; AND DECLARING AN EMERGENCY AND PROVIDING AN EFFECTIVE DATE.16

Be It Enacted by the Legislature of the State of Idaho:17

SECTION 1. That Title 48, Idaho Code, be, and the same is hereby amended18 by the addition thereto of a NEW CHAPTER, to be known and designated as Chap-19 ter 21, Title 48, Idaho Code, and to read as follows:20 CHAPTER 2121 LITIGATION FINANCING TRANSPARENCY, NATIONAL SECURITY, AND CONSUMER22 PROTECTION ACT23 48-2101. SHORT TITLE. This act shall be known and may be cited as the24 "Litigation Financing Transparency, National Security, and Consumer Pro-25 tection Act."26 48-2102. DEFINITIONS. As used in this chapter:27 (1) "Consumer" means any person who is or may become a plaintiff,28 claimant, or complainant in conjunction with or in pursuit of a legal claim.29 (2) "Entity" means any domestic or foreign corporation, partnership,30 limited partnership, limited liability company, trust, fund, plan, or any31 other business, enterprise, association, or organization of any kind or na-32 ture.33 (3) "Foreign adversary" means:34 (a) A foreign government of a foreign country identified or designated35 as a foreign adversary pursuant to 15 CFR 791.4, as in effect on July 1,36 2026;37 (b) Any political subdivision, agency, department, or political party38 of a foreign government identified or designated as a foreign adversary39 pursuant to 15 CFR 791.4, as in effect on July 1, 2026; or40

2 (c) A foreign nongovernment person identified or designated as a for-1 eign adversary pursuant to 15 CFR 791.4, as in effect on July 1, 2026.2 (4) "Foreign person" means:3 (a) An individual who is not a citizen of the United States or is not an4 alien lawfully admitted for permanent residence in the United States;5 (b) An entity that is not formed, organized, incorporated, or created6 in the United States;7 (c) An entity of which a majority of the persons who own or control the8 entity are not citizens of the United States or are not aliens lawfully9 admitted for permanent residence in the United States;10 (d) The government, a political subdivision, an agency, a department,11 or a political party of a country other than the United States;12 (e) An entity that has a place of business in a country other than the13 United States and that has shares or other ownership interest held by14 the government or a government official of a country other than the15 United States; or16 (f) An employee, officer, director, official, or member of an entity17 described in this subsection.18 (5) "Foreign person of concern" means a person that:19 (a) Is formed, organized, incorporated, or created in a foreign country20 identified as a foreign adversary;21 (b) Is formed, organized, incorporated, owned, controlled, or affili-22 ated, directly or indirectly, with a foreign adversary;23 (c) Maintains a personal residence or place of business in a foreign24 country identified as a foreign adversary; or25 (d) Is formed, organized, incorporated, owned, controlled, or affili-26 ated, directly or indirectly, with a foreign person that has been:27 (i) Placed on the federal office of foreign assets control's spe-28 cially designated nationals and blocked persons list, also known29 as the SDN list, as amended; or30 (ii) Designated by the United States secretary of state as a for-31 eign terrorist person or organization.32 (6) "Legal claim" means a civil action, administrative proceeding,33 claim, or cause of action to recover damages or any form of monetary or in-34 junctive relief in this state.35 (7) "Legal representative" means an attorney, group of attorneys, law36 firm, or group of law firms engaged to represent a consumer in conjunction37 with or in pursuit of a legal claim.38 (8)(a) "Litigation financier" means any person or group of persons en-39 gaged in, or formed, created, or established for the purpose of engaging40 in, the business of litigation financing or any other business or eco-41 nomic activity in which a person or group of persons receive considera-42 tion of any kind in exchange for providing litigation financing.43 (b) "Litigation financier" does not include:44 (i) A party to the legal claim;45 (ii) A legal representative engaged directly, or indirectly46 through another legal representative, to represent a party in con-47 junction with or in pursuit of the legal claim; or48 (iii) An entity or insurer with a preexisting contractual obliga-49 tion to indemnify or defend a party to a legal claim.50

3 (9) "Litigation financing" means:1 (a) The financing, funding, advancing, or loaning of money to a legal2 representative or to any person who has or may pursue or assert a legal3 claim or who is or may become a plaintiff in conjunction with or in pur-4 suit of a legal claim if:5 (i) Repayment of all or a portion of the amount financed, funded,6 advanced, or loaned is contingent in any respect on the outcome of7 a legal claim or group of legal claims;8 (ii) Repayment is required only if the person prevails in conjunc-9 tion with or in pursuit of a legal claim or group of legal claims;10 or11 (iii) The money or funds for the repayment of any amount financed,12 funded, advanced, or loaned is derived or sourced, directly or13 indirectly, from the proceeds of or other consideration realized14 from a judgment, award, settlement, verdict, or other form of15 monetary relief the person or legal representative may receive or16 recover in conjunction with or in pursuit of a legal claim or group17 of legal claims; or18 (b) Any agreement or arrangement involving the financing, funding, ad-19 vancing, or loaning of money to a legal representative if the repayment20 of all or a portion of the amount financed, funded, advanced, or loaned21 is contingent on the outcome of any single legal claim or group of legal22 claims in which the legal representative represents one (1) or more con-23 sumers.24 (10)(a) "Litigation financing contract" means a written contract in25 which a person agrees to provide litigation financing to any person in26 consideration for:27 (i) The payment of interest, fees, or other consideration to the28 person providing the litigation financing; or29 (ii) Granting or assigning to the person providing the litigation30 financing a right to receive payment from the value of any proceeds31 or other consideration realized from any judgment, award, settle-32 ment, verdict, or other form of monetary relief any consumer, le-33 gal representative, or other person may receive or recover in re-34 lation to the legal claim.35 (b) "Litigation financing contract" includes any agreement related to36 a litigation financing contract.37 (c) "Litigation financing contract" does not include any agreement,38 contract, or engagement of a legal representative to render legal ser-39 vices to a consumer on a contingency fee basis, including the advance-40 ment of legal costs by the legal representative, in which the services41 or costs are provided to or on behalf of a consumer by the legal repre-42 sentative representing the consumer in the legal claim.43 (11) "Person" means an individual or an entity.44 (12) "Proprietary information" means any documents, records, or infor-45 mation received by a party in conjunction with or in pursuit of a legal claim46 that has economic or commercial value in any person's business and is:47 (a) Designated as proprietary information by a party to the legal48 claim; or49

4 (b) Subject to a court order to protect, seal, or otherwise restrict the1 disclosure or sharing of the documents, records, or information.2 (13) "Regulated lender" has the same meaning as provided for in section3 28-41-301, Idaho Code.4 48-2103. REGISTRATION REQUIRED. (1) A person shall not engage in liti-5 gation financing in this state unless such person is registered with the sec-6 retary of state as a litigation financier pursuant to the provisions of this7 chapter.8 (2) To register as a litigation financier, if the person registering is9 an entity:10 (a) The entity shall be active and in good standing as reflected in the11 office of the secretary of state; and12 (b) The entity's articles of incorporation, charter, articles of13 organization, certificate of limited partnership, or other organiza-14 tional or governing document shall contain a statement that the entity15 has the power to engage in the business of litigation financing and is16 designated as a litigation financier pursuant to this chapter.17 (3) To register as a litigation financier, a person shall file a reg-18 istration statement with the secretary of state setting forth the following19 information:20 (a) The legal name of the litigation financier;21 (b) The physical street address and mailing address of the litigation22 financier;23 (c) A telephone number or email address through which the litigation24 financier may be contacted;25 (d) The physical street address and mailing address of the litigation26 financier's registered office and the name of the registered agent at27 the registered office who is authorized to accept service of process on28 behalf of the litigation financier; and29 (e) Any other information the secretary of state considers necessary.30 (4) If the person seeking to register as a litigation financier is an31 entity, the following information shall be set forth in the registration32 statement with respect to each person that, directly or indirectly, owns,33 controls, holds with the power to vote, or holds proxies representing five34 percent (5%) or more of the voting securities of the litigation financier:35 (a) The legal name, physical street address, and mailing address of36 each person;37 (b) If the person is an individual:38 (i) The individual's occupation;39 (ii) Any offices and positions held with the litigation financier40 during the past five (5) years; and41 (iii) Any conviction of a crime other than misdemeanor traffic vi-42 olations during the past ten (10) years;43 (c) If the person is an entity:44 (i) The nature of the entity's business operations, if any, dur-45 ing the past five (5) years or a description of the business in-46 tended to be done by the entity and the entity's subsidiaries, if47 any; and48

5 (ii) A list of all individuals who are or who have been selected1 to become directors or officers of the entity and each subsidiary2 of the entity. The list shall include, for each individual, the3 information required by paragraph (b) of this subsection.4 (5) A litigation financier subject to registration pursuant to this5 chapter shall file an amended registration within thirty (30) days whenever6 the information contained in the most recently filed registration changes or7 becomes inaccurate or incomplete in any respect.8 (6) The secretary of state is authorized to prescribe the forms and the9 filing fees the secretary of state considers necessary for the purposes of10 this chapter.11 (7) All documents and information filed with the secretary of state12 pursuant to this section are public records.13 (8) The secretary of state's duty to file documents pursuant to this14 section is ministerial. The secretary of state's filing or refusing to file15 a document does not create a presumption that:16 (a) The document does or does not conform to the requirements of this17 chapter; or18 (b) The information contained in the document is correct or incorrect.19 48-2104. LITIGATION FINANCING PROTECTIONS. (1) A litigation fi-20 nancier shall not:21 (a) Pay or offer commissions, referral fees, rebates, or other forms22 of consideration to any person in exchange for referring a consumer or a23 consumer's legal representative to a litigation financier;24 (b) Accept any commissions, referral fees, rebates, or other forms of25 consideration from any person providing any goods or rendering any ser-26 vices to the consumer;27 (c) Charge a rate of interest that exceeds the greater of fifteen28 percent (15%) or an amount that is six (6) percentage points per year29 above the prime rate published by the federal reserve system in its30 statistical release publication, H.15 selected interest rates for bank31 prime loans, dated three (3) business days prior to the execution of32 the agreement. Interest shall be allowed according to the terms of the33 agreement;34 (d) Receive or recover any payment that exceeds twenty-five percent35 (25%) of the amount of any judgment, award, settlement, verdict, or36 other form of monetary relief obtained in the legal claim that is the37 subject of the litigation contract;38 (e) Advertise false or misleading information regarding its products39 or services;40 (f) Refer or require any consumer to hire or engage any person providing41 any goods or rendering any services to the consumer;42 (g) Fail to promptly deliver a fully completed and signed litigation43 financing contract to the consumer and the consumer's legal representa-44 tive;45 (h) Attempt to secure a remedy or obtain a waiver of any remedy, includ-46 ing but not limited to compensatory, statutory, or punitive damages,47 that the consumer may or may not be entitled to pursue or recover other-48 wise;49

6 (i) Offer or provide legal advice to the consumer;1 (j) Assign, including securitizing, a litigation financing contract in2 whole or in part;3 (k) Make, influence, or direct a decision regarding a legal claim, in-4 cluding decisions in appointing or changing counsel, choice or use of5 expert witnesses, litigation strategy, and settlement or other resolu-6 tion; or7 (l) Demand, request, receive, or exercise any right to influence, af-8 fect, or otherwise make any decision in the handling, conduct, admin-9 istration, litigation, settlement, or resolution of any legal claim in10 which the litigation financier has provided litigation financing. All11 rights remain solely with the consumer and the consumer's legal repre-12 sentative.13 (2) A person who provides any goods or renders any services to the con-14 sumer shall not have a financial interest in litigation financing and shall15 not receive any commissions, referral fees, rebates, or other forms of con-16 sideration from any litigation financier or the litigation financier's em-17 ployees, owners, or affiliates.18 (3) A party, attorney or law firm representing a party, or affiliated19 attorney or law firm shall not disclose or share any proprietary information20 with a litigation financier.21 48-2105. LITIGATION FINANCING CONTRACT -- DISCLOSURES. (1) The terms22 and conditions of a litigation financing contract shall be set forth in a23 fully completed written contract with no terms or conditions omitted. The24 litigation financing contract shall contain all terms and conditions at the25 time it is signed by any party to the litigation financing contract.26 (2) Upon execution of a litigation financing contract, a litigation fi-27 nancier shall not amend the terms or conditions of the litigation financing28 contract without full disclosure to and the prior written consent of all par-29 ties to the litigation financing contract.30 (3) A litigation financing contract shall set forth the name, physical31 street address, and mailing address of the litigation financier on page one32 (1) of the litigation financing contract.33 (4) A litigation financing contract shall contain the following dis-34 closures that constitute material terms and conditions of the litigation35 financing contract and shall be typed in at least fourteen (14) point bold36 font and be placed clearly and conspicuously immediately above the con-37 sumer's signature line in the litigation financing contract:38 IMPORTANT DISCLOSURES -- PLEASE READ CAREFULLY39 1. Right to Cancellation: You may cancel this litigation financ-40 ing contract without penalty or further obligation within five (5)41 business days from the date you sign this contract or the date you42 receive financing from the litigation financier, whichever date is43 later. You may cancel by sending a notice of cancellation to the44 litigation financier and returning to the litigation financier any45 funds received from the litigation financier at the litigation fi-46 nancier's address set forth on page 1 of this contract.47

7 2. The maximum amount the litigation financier may receive or re-1 cover from any payment may not exceed twenty-five percent (25%) of2 the amount of any judgment, award, settlement, verdict, or other3 form of monetary relief obtained in the civil action, administra-4 tive proceeding, claim, or cause of action that is the subject of5 this litigation contract.6 3. The litigation financier agrees that it has no right to, and7 will not demand, request, receive, or exercise any right to, in-8 fluence, affect, or otherwise make any decision in the handling,9 conduct, administration, litigation, settlement, or resolution of10 your civil action, administrative proceeding, claim, or cause of11 action. All of these rights remain solely with you and your legal12 representative.13 4. If there is no recovery of any money from your civil action, ad-14 ministrative proceeding, claim, or cause of action, or if there is15 not enough money to satisfy in full the portion assigned to the lit-16 igation financier, you will not owe anything in excess of your re-17 covery.18 5. You are entitled to a fully completed contract with no terms or19 conditions omitted prior to signing. Before signing this contract,20 you should read the contract completely and consult an attorney.21 (5) If the consumer is represented by a legal representative in the le-22 gal claim that is the subject of the litigation financing contract, the legal23 representative shall acknowledge in the contract that the legal representa-24 tive and the legal representative's employer and employees have not received25 or paid a referral fee or any other consideration from or to the litigation26 financier and have no obligation to do so in the future.27 (6) If the consumer's legal representative is a party to a litigation28 financing contract related to the consumer's legal claim that is the subject29 of the litigation financing contract, the legal representative shall dis-30 close and deliver the litigation financing contract to the consumer. Fol-31 lowing this disclosure and delivery, the consumer shall sign an acknowledg-32 ment that the consumer has read and understands the terms and conditions of33 the litigation financing contract and the consumer shall be provided with a34 copy of the acknowledgment.35 48-2106. DISCLOSURE AND DISCOVERY OF LITIGATION FINANCING CON-36 TRACTS. (1) Except as otherwise stipulated or ordered by a court of competent37 jurisdiction, a consumer or the consumer's legal representative shall,38 without awaiting a discovery request, disclose and deliver to the following39 persons the litigation financing contract:40 (a) Each party to the legal claim, or to each party's legal representa-41 tive;42 (b) The court, agency, or tribunal in which the legal claim may be pend-43 ing; and44 (c) Any known person, including an insurer, with a preexisting contrac-45 tual obligation to indemnify or defend a party to the legal claim.46 (2) The disclosure obligation pursuant to subsection (1) of this sec-47 tion exists regardless of whether a legal claim has commenced.48

8 (3) The disclosure obligation pursuant to subsection (1) of this sec-1 tion is a continuing obligation, and within thirty (30) days of entering into2 a litigation financing contract or amending an existing litigation financ-3 ing contract, the consumer or the consumer's legal representative shall dis-4 close and deliver any new or amended litigation financing contracts.5 (4) The existence of a litigation financing contract and all partici-6 pants or parties to the litigation financing contract are permissible sub-7 jects of discovery in any legal claim to which litigation financing is pro-8 vided under the litigation financing contract, regardless of whether a legal9 claim has commenced.10 48-2107. EXEMPTIONS. This chapter does not apply to the following:11 (1) A nonprofit entity that is exempt from federal income taxation pur-12 suant to section 501(c)(3) of the Internal Revenue Code or a nonprofit entity13 that provides litigation financing, funding, or money to a legal representa-14 tive to represent a consumer on a pro bono basis, provided that the nonprofit15 entity does not receive in consideration for the litigation financing the16 payment of interest, fees, or other consideration in excess of the amount of17 attorney's fees and litigation expenses incurred in conjunction with or in18 pursuit of the legal claim;19 (2) Any litigation financing provided by an entity engaged in commerce20 or business activity, but only if the entity does not:21 (a) Charge or collect any interest, fees, or other consideration;22 (b) Retain or receive any financial interest in the outcome of the legal23 claim; or24 (c) Receive any right to recovery or payment from the amount of any25 judgment, award, settlement, verdict, or other form of monetary relief26 obtained in conjunction with or in pursuit of the legal claim; or27 (3) A regulated lender that does not receive, in consideration for28 loaning money to any person, a right to receive payment from the value of any29 proceeds or other consideration realized from any judgment, award, settle-30 ment, verdict, or other form of monetary relief any person may receive or31 recover in conjunction with or in pursuit of the legal claim.32 48-2108. CLASS ACTIONS. In addition to all other actions to which this33 chapter applies, this chapter shall also apply to any civil action filed or34 certified as a class action in which litigation financing is provided. A35 litigation financier owes a fiduciary duty to all class members or intended36 beneficiaries of a certified class and shall act in a manner consistent with37 the litigation financier's fiduciary duty throughout the civil action. In38 addition to the disclosure requirements set forth in this chapter, the legal39 representative of the putative class shall disclose to all parties, putative40 class members, and the court any legal, financial, or other relationship be-41 tween the legal representative and the litigation financier. A class member42 is entitled to receive from the class counsel a true and correct copy of the43 litigation financing contract on request.44 48-2109. JOINT AND SEVERAL LIABILITY FOR COSTS. A litigation fi-45 nancier is jointly and severally liable for any award or order imposing or46 assessing costs or monetary sanctions against a consumer or a party's legal47

9 representative arising from or relating to any legal claim for which the1 litigation financier is providing litigation financing.2 48-2110. PROHIBITION ON LITIGATION FUNDING BY FOREIGN ADVERSARIES OR3 FOREIGN PERSONS OF CONCERN. (1) A foreign adversary or a foreign person of4 concern may not engage in litigation financing in this state.5 (2) A foreign adversary or a foreign person of concern may not, directly6 or indirectly, invest in, finance, fund, or loan money to a litigation fi-7 nancier engaged in litigation financing in this state.8 (3) A litigation financier engaged in litigation financing in this9 state may not, directly or indirectly:10 (a) Become affiliated with or maintain an affiliation with a foreign11 adversary or a foreign person of concern;12 (b) Receive or accept money or funds from a foreign adversary or a for-13 eign person of concern; or14 (c) Allow a foreign adversary or a foreign person of concern to invest15 in, maintain an ownership interest in, or exercise any control over the16 litigation financier.17 48-2111. RESTRICTION ON DISCLOSURE OF PROPRIETARY INFORMATION. A18 party to a legal claim in this state shall not disclose to or share with a19 foreign person, a foreign adversary, or a foreign person of concern any pro-20 prietary information.21 48-2112. LIMITATIONS ON FOREIGN LITIGATION FUNDING. A foreign person22 who, directly or indirectly: engages in litigation financing; becomes af-23 filiated with or maintains an affiliation with a litigation financier; fi-24 nances, funds, or loans money to a litigation financier; or invests in, main-25 tains an ownership interest in, or exercises any control over a litigation26 financier shall not:27 (1) Become affiliated with or maintain an affiliation with a foreign28 adversary or a foreign person of concern;29 (2) Receive or accept money or funds from a foreign adversary or a for-30 eign person of concern; or31 (3) Allow a foreign adversary or a foreign person of concern to invest32 in, maintain an ownership interest in, or exercise control over the foreign33 person.34 48-2113. REGISTRATION AND TRANSPARENCY OF FOREIGN PERSONS. (1) A for-35 eign person who is qualified to engage in litigation financing in this state36 shall comply with this chapter if the foreign person engages in litigation37 financing in this state.38 (2) A litigation financier shall disclose in writing to the secretary39 of state the information set forth in subsection (3) of this section if the40 litigation financier engages in any of the following:41 (a) Becomes affiliated with or maintains affiliation with a foreign42 person;43 (b) Receives or accepts money or funds from a foreign person for any44 purpose; or45

10 (c) Allows a foreign person to invest in, maintain an ownership inter-1 est in, or exercise any control over the litigation financier.2 (3) The following information shall be disclosed in writing to the sec-3 retary of state:4 (a) The name and address of the foreign person and the citizenship of5 the foreign person or the country of incorporation, formation, or reg-6 istration of the foreign person; and7 (b) A copy of each litigation financing contract in which the foreign8 person is entitled to receive any payment under the contract.9 (4) The litigation financier shall provide the written notice required10 pursuant to subsection (2) of this section within thirty (30) days after the11 date on which any litigation financing agreement is executed by the con-12 sumer.13 48-2114. REGULATORY OVERSIGHT -- RULEMAKING. The secretary of state14 is authorized to adopt rules and other policies in overseeing the practice of15 litigation financing consistent with this chapter, subject to legislative16 approval.17 48-2115. ACT VIOLATION -- UNENFORCEABLE CONTRACT. (1) Any violation18 of this chapter by a litigation financier shall render the litigation fi-19 nancing contract unenforceable by the litigation financier or any succes-20 sor-in-interest to the litigation financing contract.21 (2) If a litigation financier charges a rate of interest that exceeds22 the rate of interest allowed pursuant to section 48-2104(1)(c), Idaho Code,23 the litigation financier shall be subject to a penalty for usury and an ac-24 tion to recover excessive interest.25 48-2116. APPLICABILITY. This chapter shall apply to any legal claim26 pending or commenced on or after July 1, 2026.27

SECTION 2. SEVERABILITY. The provisions of this act are hereby declared28 to be severable and if any provision of this act or the application of such29 provision to any person or circumstance is declared invalid for any reason,30 such declaration shall not affect the validity of the remaining portions of31 this act.32

SECTION 3. An emergency existing therefor, which emergency is hereby33 declared to exist, this act shall be in full force and effect on and after34 July 1, 2026.35