HB2638 Summary

• Adds Chapter 27 to Title 12 of Arizona Revised Statutes to regulate litigation financing agreements, defining key terms including "litigation financier," "funded consumer," and excluding certain loans and arrangements from the definition.

• Prohibits litigation financiers from directing litigation decisions, receiving larger proceeds than named parties, paying referral fees to attorneys or healthcare providers, assigning agreements, or being assigned rights to the underlying action.

• Requires disclosure of litigation financing agreements to all parties, courts, insurers, and class members within 30 days of action commencement, including disclosures of foreign persons, foreign principals, and sovereign wealth funds involved in the financing.

• Mandates litigation financiers indemnify funded consumers against adverse costs, attorney fees, damages, or sanctions ordered in the action, except for damages resulting from consumer intentional wrongful conduct.

• Establishes enforcement mechanisms making violations unlawful practices under existing consumer protection law, voids agreements violating the chapter, and authorizes courts to impose sanctions for failure to disclose required information.

• Effective December 31, 2024, and applies to civil actions and administrative proceedings pending or commenced on or after that date.