Bill Analyses and Ratings
Bill Information: H0646 – Litigation Financing Regulation and Foreign Ban
Bill Summary
This bill establishes comprehensive regulation of litigation financing in Idaho by creating a new Chapter 21 in Title 48 of Idaho Code. Litigation financing involves third parties providing funding to plaintiffs or attorneys in exchange for a share of any settlement or judgment. The bill requires all litigation financiers to register with the Secretary of State and disclose ownership information, including anyone holding 5% or more of voting securities. It imposes strict consumer protections including a 15% interest rate cap (or prime rate plus 6%, whichever is greater), limits recovery to 25% of any judgment or settlement, and prohibits litigation financiers from influencing legal decisions, paying referral fees, or assigning contracts.
The bill mandates detailed written contracts with specific disclosures in 14-point bold font, grants consumers a 5-day cancellation right, and requires automatic disclosure of financing contracts to all parties, courts, and insurers in any legal proceeding. It also contains national security provisions that completely prohibit foreign adversaries and foreign persons of concern from engaging in litigation financing or investing in litigation financiers. Violations render financing contracts unenforceable and subject violators to usury penalties, and litigation financiers are made jointly liable for any costs or sanctions imposed on funded parties.
Overall Assessment
This bill creates an entirely new regulatory framework governing litigation financing in Idaho, touching on government oversight of commercial transactions, consumer protections, and national security concerns.
The one area where the bill does register an impact is in the category of Responsibility in Government, where it receives a score of -1. The bill’s extensive new registration requirements, regulatory mandates, and government oversight mechanisms expand the role of the state in commercial and legal transactions. While some of its provisions—such as the foreign adversary prohibitions—address legitimate concerns, the overall regulatory burden introduced by this legislation represents an expansion of government involvement that works against principles of limited government and individual economic freedom.
Rating Breakdown
ARTICLE I. RESPONSIBILITY IN GOVERNMENT (-1)
This bill creates a significant new regulatory apparatus requiring litigation financiers to register with the Secretary of State, comply with detailed contractual mandates, and submit to ongoing government oversight of their business practices. While some provisions address legitimate concerns such as consumer protection and national security, the overall framework expands government involvement in commercial and legal transactions in ways that conflict with principles of limited, responsible government. This expansion of bureaucratic oversight and regulation warrants a score of -1.
ARTICLE II. CITIZEN INVOLVEMENT IN GOVERNMENT (0)
This bill does not contain provisions that directly affect citizen participation in government, voting rights, or civic engagement processes. Its focus is on commercial regulation of litigation financing and has no meaningful impact on this metric.
ARTICLE III. EDUCATION (0)
This bill does not address education policy, school funding, curriculum, or any related educational matters. Its provisions are confined to the regulation of litigation financing and have no bearing on this metric.
ARTICLE IV. AGRICULTURE (0)
This bill has no provisions related to agriculture, farming practices, or agricultural policy in Idaho. It is focused entirely on litigation financing regulation and does not impact this metric.
ARTICLE V. WATER (0)
This bill contains no provisions related to water rights, water management, or water policy in Idaho. It does not affect this metric in any way.
ARTICLE VI. NATURAL RESOURCES AND ENVIRONMENT (0)
This bill does not address natural resources, environmental regulation, or conservation policy. Its scope is limited to litigation financing and has no impact on this metric.
ARTICLE VII. ENERGY (0)
This bill has no provisions related to energy production, energy policy, or energy regulation in Idaho. It does not affect this metric.
ARTICLE VIII. IDAHO NATIONAL LABORATORIES (0)
This bill contains no provisions related to the Idaho National Laboratories or associated research and development activities. It does not impact this metric.
ARTICLE IX. PRIVATE PROPERTY RIGHTS (0)
This bill does not directly address private property rights, eminent domain, or related property protections. Its regulatory focus on litigation financing contracts and financier conduct does not meaningfully engage with this metric.
ARTICLE X. STATE AND FEDERAL LANDS (0)
This bill has no provisions related to state or federal land management, land use policy, or public lands in Idaho. It does not affect this metric.
ARTICLE XI. WILDLIFE MANAGEMENT (0)
This bill contains no provisions related to wildlife management, hunting, fishing, or related conservation activities. It does not impact this metric.
ARTICLE XII. ECONOMY (0)
While this bill does regulate a segment of the financial services industry, its provisions are narrowly tailored to litigation financing and do not broadly advance or hinder Idaho's overall economic framework in a manner sufficient to move this metric from neutral.
ARTICLE XIII. HEALTH AND WELFARE (0)
This bill does not address health care policy, public health, or welfare programs. Its consumer protection provisions are specific to litigation financing contracts and do not engage with broader health and welfare concerns covered by this metric.
ARTICLE XIV. AMERICAN FAMILY (0)
This bill has no provisions related to family policy, parental rights, or family structure. Its focus on commercial litigation financing regulation does not impact this metric.
ARTICLE XV. OLDER AMERICANS (0)
This bill does not contain provisions specifically addressing the needs, rights, or protections of older Americans. It does not affect this metric.
ARTICLE XVI. LAW AND ORDER WITH JUSTICE (0)
While this bill does operate within the legal system by regulating litigation financing, its provisions are primarily commercial and regulatory in nature rather than addressing criminal justice, law enforcement, or judicial integrity in ways that would move this metric from neutral.
ARTICLE XVII. NATIONAL DEFENSE – SECURING THE BORDER (0)
This bill includes provisions prohibiting foreign adversaries from engaging in litigation financing in Idaho, which addresses a national security concern. However, these provisions are not sufficiently central to border security or national defense in the traditional sense to move this metric from neutral.
ARTICLE XVIII. ELECTION OF JUDGES AND IDAHO SUPREME COURT JUSTICES (0)
This bill does not address the election, appointment, or retention of judges or Idaho Supreme Court justices. It does not impact this metric.
ARTICLE XIX. RELIGIOUS LIBERTY (0)
This bill contains no provisions related to religious liberty, freedom of conscience, or religious expression. It does not affect this metric.