House approves HB 280 to regulate third-party litigation funding and extend consumer protections

The Utah House on Feb. 24 adopted and passed third substitute HB 280, a measure addressing third-party litigation funding. Representative Dunnegan described the industry and explained the bill’s consumer protections: registration for commercial litigation funders, a registry fee (sponsor cited about $300), an extension of consumer rescission rights from five to 10 days, required annual reporting and prohibitions on certain foreign investors in litigation funding.

Dunnegan said the substitute includes a coordination clause with a Senate companion bill and was drafted in consultation with industry groups and consumer-protection organizations. He said the bill is intended to increase transparency and protect consumers who use litigation funding to cover living expenses while legal claims are resolved.

After presentation and waived debate, the House passed the third substitute by voice vote as recorded in the transcript — tally recorded as 67 yes, 1 no — and the bill will be sent to the Senate.

What’s next: HB 280 moves to the Senate for further consideration. If enacted, the Department of Commerce or a similar regulator will likely implement the registration and reporting requirements.