NY S09105

Creates Article 39-H in General Business Law to regulate third-party litigation funding companies providing non-recourse advances to consumers with pending legal claims.

Requires all consumer litigation funding contracts to be written in plain language, fully completed before signing, include consumer initials on each page, and contain a 10-business-day rescission right allowing consumers to cancel without penalty by returning full disbursed funds.

Caps charges at the maximum annual percentage rate for military lending under federal law (currently 36%), with violations treated as usury; prohibits prepayment penalties and restricts charges to predetermined time-based amounts rather than percentages of legal claim recovery.

Mandates attorney acknowledgement in contracts confirming they are paid contingency, have not received referral fees from the funding company, will disburse proceeds through their trust account, and have provided no tax or financial advice regarding the transaction.

Requires consumer litigation funding companies to register with the New York Secretary of State (initial $500 fee, $200 biennial renewal), prohibits referral payments to attorneys and medical providers, bars companies from interfering with legal decisions, and imposes civil penalties up to $5,000 per violation with violators losing right to recover funded amounts and charges.