Sen. Nick Collins (First Suffolk) filed Senate Bill No. 680, “An Act to provide transparency in third party litigation financing,” on Jan. 17, 2025. The bill would add a new Chapter 167K to the Massachusetts General Laws to regulate consumer and commercial litigation financing and to require registration, disclosures and limits for companies that purchase or fund contingent legal claims.

The proposal would cap annual charges on consumer litigation funding at 36% (plus a one‑time document preparation fee set by the Division of Banks), require contracts be written in clear, 12‑point bold disclosures for key terms, and give consumers a 10‑business‑day rescission right after the funding date. Contracts must be fully filled in, initialed on each page, and contain an attorney acknowledgement that the attorney reviewed the required disclosures and is paid on contingency. The bill also bars prepayment penalties and prohibits referral fees or commissions to attorneys and certain health providers.

Under the bill, consumer litigation funding companies and commercial financiers would have to register with the Division of Banks, submit character and ownership information (including beneficial ownership over 20%), and file a bond or irrevocable letter of credit if required. Registrations would be renewed every two years and expire Sept. 30 in renewal years; the commissioner may adopt implementing rules. Registrants must file annual reports by Jan. 31 that summarize number of fundings, funded dollar amounts, and annual percentage charged where repayment occurred; the Division would publish aggregated data while maintaining name confidentiality.

The text would require plaintiffs who enter consumer funding arrangements to notify other parties and insurers in the civil case within 30 days of executing the contract; it makes the contents of such contracts discoverable under the Massachusetts Rules of Civil Procedure and Evidence where relevant. The bill also makes clear that communications between a consumer’s attorney and a funding company to assess claim status or value are protected from discovery by an opposing party, and it forbids funders from directing or influencing litigation strategy, settlements or exercising decision rights in a case.

The legislation creates civil remedies for willful violations: a funding company that willfully violates the chapter in a specific case would forfeit its right to recover funded amounts and charges in that case and be subject to civil penalties enforceable by the attorney general. The bill prioritizes attorney liens and statutory liens (for example Medicare) over funders’ liens, and prohibits commercial financiers from contracting with certain defined “foreign entities of concern.”

Sen. Collins presented the bill as a petition to the General Court; it was filed and placed with the Senate Committee on Financial Services. The bill text sets an effective date of 90 days after the governor’s signature and states it would not apply to funding agreements executed prior to the statute’s effective date.