Committee hears industry and consumer advocates on transparency bill for consumer legal funding
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Summary
SB 426 would regulate consumer legal funding contracts, require disclosures and registrations, and prohibit certain funder conduct; proponents said friendly amendments will clarify definitions and enforcement to address committee concerns.
The Senate Judiciary Committee heard testimony on SB 426, the Kansas Transparency and Consumer Legal Funding Act, which would regulate consumer legal funding transactions and set contract and disclosure standards.
The reviser outlined the bill's key provisions: a definition of consumer legal funding, contract requirements (clear writing, page initials, right of rescission, itemized charges, and translation on request), limits on repayment penalties, a rule that such transactions are not loans, and constraints on funder conduct (no referral fees to attorneys, no influence over case decisions, registration with the secretary of state). The bill also provides remedies including statutory damages, attorney fees, and injunctive relief.
Industry witnesses including Eric Schueller (Responsible Consumer Legal Funding) and Harrison Hosker (American Legal Finance Association) said the bill creates transparency and would be acceptable with clarifying amendments. Senator Clays raised concerns that the draft differs from a model act that relies on attorney‑general enforcement and a willful‑violation standard; proponents agreed to consider language allowing AG enforcement and willful‑violation standards to address those concerns.
The committee closed the hearing with proponents open to friendly amendments to align enforcement and definition language.
