Adds to existing law to establish the Litigation Financing Transparency, National Security, and Consumer Protection Act.

LEGISLATURE OF THE STATE OF IDAHO Sixty-eighth Legislature Second Regular Session - 2026 IN THE HOUSE OF REPRESENTATIVES HOUSE BILL NO. 946 BY WAYS AND MEANS COMMITTEE AN ACT1 RELATING TO THE LITIGATION FINANCING TRANSPARENCY, NATIONAL SECURITY, AND2 CONSUMER PROTECTION ACT; AMENDING TITLE 48, IDAHO CODE, BY THE ADDITION3 OF A NEW CHAPTER 21, TITLE 48, IDAHO CODE, TO PROVIDE A SHORT TITLE, TO4 DEFINE TERMS, TO REQUIRE CERTAIN REGISTRATION, TO ESTABLISH LITIGATION5 FINANCING PROTECTIONS, TO PROVIDE FOR LITIGATION FINANCING CONTRACTS6 AND DISCLOSURES, TO PROVIDE FOR DISCLOSURE AND DISCOVERY OF LITIGATION7 FINANCING CONTRACTS, TO ESTABLISH EXEMPTIONS, TO PROVIDE CERTAIN AP-8 PLICABILITY REGARDING CLASS ACTIONS, TO PROHIBIT LITIGATION FUNDING9 BY FOREIGN ADVERSARIES, TO RESTRICT DISCLOSURE OF PROPRIETARY INFOR-10 MATION, TO ESTABLISH LIMITATIONS ON FOREIGN LITIGATION FUNDING, TO11 PROVIDE FOR THE REGISTRATION AND TRANSPARENCY OF FOREIGN PERSONS, TO12 ESTABLISH PROVISIONS REGARDING CHAPTER VIOLATIONS, AND TO PROVIDE FOR13 CHAPTER APPLICABILITY; PROVIDING SEVERABILITY; AND DECLARING AN EMER-14 GENCY AND PROVIDING AN EFFECTIVE DATE.15

Be It Enacted by the Legislature of the State of Idaho:16

SECTION 1. That Title 48, Idaho Code, be, and the same is hereby amended17 by the addition thereto of a NEW CHAPTER, to be known and designated as Chap-18 ter 21, Title 48, Idaho Code, and to read as follows:19 CHAPTER 2120 LITIGATION FINANCING TRANSPARENCY, NATIONAL SECURITY, AND CONSUMER21 PROTECTION ACT22 48-2101. SHORT TITLE. This act shall be known and may be cited as the23 "Litigation Financing Transparency, National Security, and Consumer Pro-24 tection Act."25 48-2102. DEFINITIONS. As used in this chapter:26 (1) "Consumer" means any person who is or may become a plaintiff,27 claimant, or complainant in conjunction with or in pursuit of a legal claim.28 (2) "Entity" means any domestic or foreign corporation, partnership,29 limited partnership, limited liability company, trust, fund, plan, or any30 other business, enterprise, association, or organization of any kind or na-31 ture.32 (3) "Foreign adversary" means:33 (a) A foreign government of a foreign country identified or designated34 as a foreign adversary pursuant to 15 CFR 791.4, as in effect on July 1,35 2026;36 (b) Any political subdivision, agency, department, or political party37 of a foreign government identified or designated as a foreign adversary38 pursuant to 15 CFR 791.4, as in effect on July 1, 2026; or39

2 (c) A foreign nongovernment person identified or designated as a for-1 eign adversary pursuant to 15 CFR 791.4, as in effect on July 1, 2026.2 (4) "Foreign person" means:3 (a) An individual who is not a citizen of the United States or is not an4 alien lawfully admitted for permanent residence in the United States;5 (b) An entity that is not formed, organized, incorporated, or created6 in the United States;7 (c) An entity of which a majority of the persons who own or control the8 entity are not citizens of the United States or are not aliens lawfully9 admitted for permanent residence in the United States;10 (d) The government, a political subdivision, an agency, a department,11 or a political party of a country other than the United States;12 (e) An entity that has a place of business in a country other than the13 United States and that has shares or other ownership interest held by14 the government or a government official of a country other than the15 United States; or16 (f) An employee, officer, director, official, or member of an entity17 described in this subsection.18 (5) "Foreign person of concern" means a person that:19 (a) Is formed, organized, incorporated, or created in a foreign country20 identified as a foreign adversary;21 (b) Is formed, organized, incorporated, owned, controlled, or affili-22 ated, directly or indirectly, with a foreign adversary;23 (c) Maintains a personal residence or place of business in a foreign24 country identified as a foreign adversary; or25 (d) Is formed, organized, incorporated, owned, controlled, or affili-26 ated, directly or indirectly, with a foreign person that has been:27 (i) Placed on the federal office of foreign assets control's spe-28 cially designated nationals and blocked persons list, also known29 as the SDN list, as amended; or30 (ii) Designated by the United States secretary of state as a for-31 eign terrorist person or organization.32 (6) "Legal claim" means a civil action, administrative proceeding,33 claim, or cause of action to recover damages or any form of monetary or in-34 junctive relief in this state.35 (7) "Legal representative" means an attorney or attorneys engaged to36 represent a consumer in conjunction with or in pursuit of a legal claim.37 (8)(a) "Litigation financier" means any person or group of persons en-38 gaged in, or formed, created, or established for the purpose of engaging39 in, the business of litigation financing or any other business or eco-40 nomic activity in which a person or group of persons receive considera-41 tion of any kind in exchange for providing litigation financing.42 (b) "Litigation financier" does not include:43 (i) A party to the legal claim;44 (ii) A legal representative engaged directly, or indirectly45 through another legal representative, to represent a party in con-46 junction with or in pursuit of the legal claim; or47 (iii) An entity or insurer with a preexisting contractual obliga-48 tion to indemnify or defend a party to a legal claim.49 (9) "Litigation financing" means:50

3 (a) The financing, funding, advancing, or loaning of money to a legal1 representative or to any person who has or may pursue or assert a legal2 claim or who is or may become a plaintiff in pursuit of a legal claim if:3 (i) The legal obligation to repay all or a portion of the amount4 financed, funded, advanced, or loaned is contingent on the outcome5 of a legal claim or group of legal claims;6 (ii) Repayment is required only if the person prevails in conjunc-7 tion with or in pursuit of a legal claim or group of legal claims;8 or9 (iii) The money or funds for the repayment of any amount financed,10 funded, advanced, or loaned is derived or sourced, directly or11 indirectly, from the proceeds of or other consideration realized12 from a judgment, award, settlement, verdict, or other form of13 monetary relief the person or legal representative may receive or14 recover in conjunction with or in pursuit of a legal claim or group15 of legal claims; or16 (b) Any agreement or arrangement involving the financing, funding, ad-17 vancing, or loaning of money to a legal representative if the repayment18 of all or a portion of the amount financed, funded, advanced, or loaned19 is contingent on the outcome of any single legal claim or group of legal20 claims in which the legal representative represents one (1) or more con-21 sumers.22 (10)(a) "Litigation financing contract" means a written contract in23 which a person agrees to provide litigation financing to any person in24 consideration for:25 (i) The payment of interest, fees, or other consideration to the26 person providing the litigation financing; or27 (ii) Granting or assigning to the person providing the litigation28 financing a right to receive payment from the value of any proceeds29 or other consideration realized from any judgment, award, settle-30 ment, verdict, or other form of monetary relief any consumer, le-31 gal representative, or other person may receive or recover in re-32 lation to the legal claim.33 (b) "Litigation financing contract" does not include any agreement,34 contract, or engagement of a legal representative to render legal ser-35 vices to a consumer on a contingency fee basis, including the advance-36 ment of legal costs by the legal representative, in which the services37 or costs are provided to or on behalf of a consumer by the legal repre-38 sentative representing the consumer in the legal claim.39 (11) "Person" means an individual or an entity.40 (12) "Proprietary information" means any documents, records, or infor-41 mation received by a party in conjunction with or in pursuit of a legal claim42 that has economic or commercial value in any person's business and is:43 (a) Designated as proprietary information by a party to the legal44 claim; or45 (b) Subject to a court order to protect, seal, or otherwise restrict the46 disclosure or sharing of the documents, records, or information.47 (13) "Regulated lender" has the same meaning as provided for in section48 28-41-301, Idaho Code.49

4 48-2103. REGISTRATION REQUIRED. (1) A person shall not engage in liti-1 gation financing in this state unless such person is registered with the sec-2 retary of state as a litigation financier pursuant to the provisions of this3 chapter.4 (2) To register as a litigation financier, if the person registering is5 an entity, the entity shall be active and in good standing as reflected in the6 office of the secretary of state.7 (3) To register as a litigation financier, a person shall file a reg-8 istration statement with the secretary of state setting forth the following9 information:10 (a) The legal name of the litigation financier;11 (b) The physical street address and mailing address of the litigation12 financier; and13 (c) The name, physical street address, and mailing address of the lit-14 igation financier's registered agent in this state who is authorized to15 accept service of process on behalf of the litigation financier.16 (4) If the person seeking to register as a litigation financier is an17 entity, the following information shall be set forth in the registration18 statement with respect to each person that owns, controls, or holds with the19 power to vote five percent (5%) or more of the beneficial interests or voting20 interests of the litigation financier:21 (a) The legal name, physical street address, and mailing address of22 each person;23 (b) If the person is an individual, a disclosure of any conviction of a24 felony involving theft, fraud, deception, or dishonesty during the past25 ten (10) years;26 (c) If the person is an entity, and if such information is not other-27 wise disclosed in the entity's filing with the secretary of state for28 authorization to do business in this state, a list of all individuals29 who are directors, officers, trustees, partners, members, or managers30 of the entity and each subsidiary of the entity, if any. Such list shall31 include, for each individual, the information required to be provided32 pursuant to this subsection.33 (5) A litigation financier subject to registration pursuant to this34 chapter shall file an updated registration:35 (a) Annually; and36 (b) Within thirty (30) days of any change in ownership, control, or man-37 agement of the entity that causes the information required to be pro-38 vided pursuant to subsection (4) of this section to become inaccurate.39 (6) The secretary of state is authorized to prescribe the forms and the40 filing fees the secretary of state considers necessary for the purposes of41 this chapter.42 48-2104. LITIGATION FINANCING PROTECTIONS. (1) A litigation fi-43 nancier shall not:44 (a) Pay or offer commissions, referral fees, rebates, or other forms45 of consideration to any person in exchange for referring a consumer or a46 consumer's legal representative to a litigation financier;47

5 (b) Accept any commissions, referral fees, rebates, or other forms of1 consideration from any person providing any goods or rendering any ser-2 vices to the consumer;3 (c) Receive or recover any payment that exceeds twenty-five percent4 (25%) of the amount of any judgment, award, settlement, verdict, or5 other form of monetary relief obtained in the legal claim that is the6 subject of the litigation contract;7 (d) Advertise false or misleading information regarding its products8 or services;9 (e) Refer or require any consumer to hire or engage any person providing10 any goods or rendering any services to the consumer;11 (f) Fail to promptly deliver a fully completed and signed litigation12 financing contract to the consumer and the consumer's legal representa-13 tive;14 (g) Attempt to secure a remedy or obtain a waiver of any remedy, includ-15 ing but not limited to compensatory, statutory, or punitive damages,16 that the consumer may or may not be entitled to pursue or recover other-17 wise;18 (h) Offer or provide legal advice to the consumer;19 (i) Assign, including securitizing, a litigation financing contract in20 whole or in part;21 (j) Make, influence, or direct a decision regarding a legal claim, in-22 cluding decisions in appointing or changing counsel, choice or use of23 expert witnesses, litigation strategy, and settlement or other resolu-24 tion; or25 (k) Demand, request, receive, or exercise any right to influence, af-26 fect, or otherwise make any decision in the handling, conduct, admin-27 istration, litigation, settlement, or resolution of any legal claim in28 which the litigation financier has provided litigation financing. All29 rights remain solely with the consumer and the consumer's legal repre-30 sentative.31 (2) A person who provides any goods or renders any services to the con-32 sumer that are related to the litigation being financed shall not have a fi-33 nancial interest in litigation financing for the consumer and shall not re-34 ceive any commissions, referral fees, rebates, or other forms of considera-35 tion from any litigation financier or the litigation financier's employees,36 owners, or affiliates.37 (3) A party, attorney or law firm representing a party, or affiliated38 attorney or law firm shall not disclose or share any proprietary information39 with a litigation financier.40 48-2105. LITIGATION FINANCING CONTRACT -- DISCLOSURES. (1) The terms41 and conditions of a litigation financing contract shall be set forth in a42 fully completed written contract with no terms or conditions omitted. The43 litigation financing contract shall contain all terms and conditions at the44 time it is signed by any party to the litigation financing contract.45 (2) Upon execution of a litigation financing contract, a litigation fi-46 nancier shall not amend the terms or conditions of the litigation financing47 contract without full disclosure to and the prior written consent of all par-48 ties to the litigation financing contract.49

6 (3) A litigation financing contract shall set forth the name, physical1 street address, and mailing address of the litigation financier on page one2 (1) of the litigation financing contract.3 (4) A litigation financing contract shall contain clear and conspicu-4 ous disclosures immediately above the consumer's signature line informing5 the consumer that:6 (a) The contract may be canceled by sending written notice to the liti-7 gation financier within five (5) days after signing the contract or re-8 ceiving funds from the litigation financier, whichever is later;9 (b) The fee amount shall be disclosed and may not exceed twenty-five10 percent (25%) of the monetary amount received from a verdict, judgment,11 or settlement;12 (c) A litigation financier shall not seek to influence any aspect of the13 litigation, as such right shall belong only to the consumer and its le-14 gal representative; and15 (d) If there is no recovery of money in the litigation or if the recov-16 ery is insufficient to pay the litigation financier's full fee, the con-17 sumer shall owe nothing in excess of its monetary recovery.18 (5) If the consumer's legal representative is a party to a litigation19 financing contract related to the consumer's legal claim that is the subject20 of the litigation financing contract, the legal representative shall dis-21 close and deliver the litigation financing contract to the consumer.22 48-2106. DISCLOSURE AND DISCOVERY OF LITIGATION FINANCING CON-23 TRACTS. (1) Except as otherwise stipulated or ordered by a court of competent24 jurisdiction, a consumer or the consumer's legal representative shall,25 without awaiting a discovery request, disclose and deliver to the following26 persons the litigation financing contract:27 (a) Each party to the legal claim, or to each party's legal representa-28 tive; and29 (b) The court, agency, or tribunal in which the legal claim may be pend-30 ing.31 (2) If a demand for payment is made before a suit is filed, a party who32 makes that demand shall, upon request of the party on whom demand is made,33 disclose and deliver any litigation financing contract to the party on whom34 demand is made.35 (3) The disclosure obligations pursuant to subsections (1) and (2) of36 this section are continuing obligations, and within thirty (30) days of en-37 tering into a litigation financing contract or amending an existing litiga-38 tion financing contract, the consumer or the consumer's legal representa-39 tive shall disclose and deliver any new or amended litigation financing con-40 tract.41 (4) The existence of a litigation financing contract and all partici-42 pants or parties to the litigation financing contract are permissible sub-43 jects of discovery in any legal claim to which litigation financing is pro-44 vided under the litigation financing contract.45 48-2107. EXEMPTIONS. This chapter does not apply to the following:46 (1) A nonprofit entity that is exempt from federal income taxation pur-47 suant to section 501(c)(3) of the Internal Revenue Code or a nonprofit entity48

7 that provides litigation financing, funding, or money to a legal representa-1 tive to represent a consumer on a pro bono basis, provided that the nonprofit2 entity does not receive in consideration for the litigation financing the3 payment of interest, fees, or other consideration in excess of the amount of4 attorney's fees and litigation expenses incurred in conjunction with or in5 pursuit of the legal claim;6 (2) Any litigation financing provided by an entity engaged in commerce7 or business activity, but only if the entity does not:8 (a) Charge or collect any interest, fees, or other consideration;9 (b) Obtain or receive any financial interest in the outcome of the legal10 claim; or11 (c) Receive any right to recovery or payment from the amount of any12 judgment, award, settlement, verdict, or other form of monetary relief13 obtained in conjunction with or in pursuit of the legal claim; or14 (3) A regulated lender that does not receive, in consideration for15 loaning money to any person, a right to receive payment pursuant to a litiga-16 tion financing contract.17 48-2108. CLASS ACTIONS. In addition to all other actions to which this18 chapter applies, this chapter shall also apply to any civil action filed or19 certified as a class action in which litigation financing is provided. A20 litigation financier owes a fiduciary duty to all class members or intended21 beneficiaries of a certified class and shall act in a manner consistent with22 the litigation financier's fiduciary duty throughout the civil action. In23 addition to the disclosure requirements set forth in this chapter, the legal24 representative of the putative class shall disclose to all parties, putative25 class members, and the court any legal, financial, or other relationship be-26 tween the legal representative and the litigation financier. A class member27 is entitled to receive from the class counsel a true and correct copy of the28 litigation financing contract on request.29 48-2109. PROHIBITION ON LITIGATION FUNDING BY FOREIGN ADVERSARIES OR30 FOREIGN PERSONS OF CONCERN. (1) A foreign adversary or a foreign person of31 concern may not engage in litigation financing in this state.32 (2) A foreign adversary or a foreign person of concern may not, directly33 or indirectly, invest in, finance, fund, or loan money to a litigation fi-34 nancier engaged in litigation financing in this state.35 (3) A litigation financier engaged in litigation financing in this36 state may not, directly or indirectly:37 (a) Become affiliated with or maintain an affiliation with a foreign38 adversary or a foreign person of concern;39 (b) Receive or accept money or funds from a foreign adversary or a for-40 eign person of concern; or41 (c) Allow a foreign adversary or a foreign person of concern to invest42 in, maintain an ownership interest in, or exercise any control over the43 litigation financier.44 48-2110. RESTRICTION ON DISCLOSURE OF PROPRIETARY INFORMATION. A45 party to a legal claim in this state shall not disclose to or share with a46

8 foreign person, a foreign adversary, or a foreign person of concern any pro-1 prietary information.2 48-2111. LIMITATIONS ON FOREIGN LITIGATION FUNDING. A foreign person3 who, directly or indirectly: engages in litigation financing; becomes af-4 filiated with or maintains an affiliation with a litigation financier; fi-5 nances, funds, or loans money to a litigation financier; or invests in, main-6 tains an ownership interest in, or exercises any control over a litigation7 financier shall not:8 (1) Become affiliated with or maintain an affiliation with a foreign9 adversary or a foreign person of concern;10 (2) Receive or accept money or funds from a foreign adversary or a for-11 eign person of concern; or12 (3) Allow a foreign adversary or a foreign person of concern to invest13 in, maintain an ownership interest in, or exercise control over the foreign14 person.15 48-2112. REGISTRATION AND TRANSPARENCY OF FOREIGN PERSONS. (1) A for-16 eign person who is qualified to engage in litigation financing in this state17 shall comply with this chapter if the foreign person engages in litigation18 financing in this state.19 (2) A litigation financier shall disclose in writing to the secretary20 of state the information set forth in subsection (3) of this section if the21 litigation financier engages in any of the following:22 (a) Becomes affiliated with or maintains affiliation with a foreign23 person;24 (b) Receives or accepts money or funds from a foreign person for any25 purpose; or26 (c) Allows a foreign person to invest in, maintain an ownership inter-27 est in, or exercise any control over the litigation financier.28 (3) The following information shall be disclosed in writing to the sec-29 retary of state:30 (a) The name and address of the foreign person and the citizenship of31 the foreign person or the country of incorporation, formation, or reg-32 istration of the foreign person; and33 (b) A copy of each litigation financing contract in which the foreign34 person is entitled to receive any payment under the contract.35 (4) The litigation financier shall provide the written notice required36 pursuant to subsection (2) of this section within thirty (30) days after the37 date on which any litigation financing agreement is executed by the con-38 sumer.39 48-2113. ACT VIOLATION -- UNENFORCEABLE CONTRACT. (1) Any violation40 of this chapter by a litigation financier shall render the litigation fi-41 nancing contract unenforceable by the litigation financier or any succes-42 sor-in-interest to the litigation financing contract.43 (2) The prevailing party in any litigation under this chapter shall be44 entitled to costs and reasonable attorney's fees as awarded by the court.45

9 48-2114. APPLICABILITY. This chapter shall apply both to any legal1 claim commenced on or after July 1, 2026 and to any litigation financing con-2 tract executed on or after that date.3

SECTION 2. SEVERABILITY. The provisions of this act are hereby declared4 to be severable and if any provision of this act or the application of such5 provision to any person or circumstance is declared invalid for any reason,6 such declaration shall not affect the validity of the remaining portions of7 this act.8

SECTION 3. An emergency existing therefor, which emergency is hereby9 declared to exist, this act shall be in full force and effect on and after10 July 1, 2026.11