This bill regulates third-party litigation funding (TPLF) in Colorado, especially when provided by foreign entities, to enhance transparency, protect national security, and prevent undue influence over civil lawsuits.
Key Provisions:
Definitions:
Third-party litigation funder = Anyone funding a lawsuit for profit who is not the party, attorney, insurer, or nonprofit.
Foreign funders = Entities owned or controlled by governments of "foreign countries of concern" (e.g., China, Russia).
Litigation financing agreement = A deal where a funder gets paid only if the case wins or settles.
Disclosure Requirements:
Foreign funders must file their name, country of registration, and a copy of the funding agreement with the Colorado Attorney General.
Disclosures are due at the start of litigation or within 35 days of funding agreement execution.
Any changes to this information must also be reported within 35 days.
Restrictions on Foreign Funders:
Cannot use foreign-sourced money to finance lawsuits.
Cannot use domestic fronts to disguise foreign funding.
Cannot influence legal strategy or settlement decisions.
Cannot share proprietary or national security information.
Enforcement and Oversight:
Noncompliance voids the funding agreement and is considered a deceptive trade practice.
The Attorney General can take legal action, impose fines, or ban foreign funders from operating in Colorado.
Annual reports to the legislature must list foreign funders and violations, but not specific case details.
Exemptions:
Nonprofit legal organizations providing pro bono representation are exempt.
Overall Effect: This bill targets the influence of foreign governments and entities in Colorado civil litigation by enforcing transparency and limiting their legal and financial footprint.
Summary
The bill requires a foreign third-party funder that enters into a
litigation financing agreement to disclose and submit certain information to the Colorado attorney general.
The bill prohibits a foreign third-party funder from taking part in
certain activities.
The bill subjects a litigation financing agreement to discovery under the Colorado rules of civil procedure and Colorado rules of evidence.
The bill deems a litigation financing agreement entered into by a
foreign third-party litigation funder void if the foreign third-party litigation funder fails to comply with the activity and disclosure requirements.
The bill allows the attorney general to bring legal action against a
foreign third-party litigation funder to enforce compliance with the bill, impose fines, prohibit a foreign third-party litigation funder from operating in this state, or impose any other sanction the attorney general deems appropriate for a violation of the activity or disclosure requirements.
