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Consumer Legal Funding Transactions

Concerning the regulation of consumer legal funding transactions.
2023 Regular Session
Business & Economic Development
Financial Services & Commerce
Bill Summary

The bill establishes the "Colorado Consumer Legal Funding Act" (act). A consumer legal funding transaction occurs when a consumer legal funding company (company) purchases, for an amount not to exceed $500,000, an interest in an individual's (consumer) associated legal claim. The money provided by the company must be repaid from the proceeds, if any, resulting from the settlement or judgment of the consumer's associated legal claim. The company may also receive a funding fee as part of the contract. The funding fee may not exceed 36% of the funded amount. The money provided to a consumer is meant to cover living expenses while the consumer awaits resolution of the associated legal claim.

The bill provides the requirements for a consumer legal funding contract. A consumer legal funding contract is satisfied when a consumer's associated legal claim has been resolved or settled. The consumer must pay the company a predetermined amount, as specified in the contract, and the amount may not be calculated as a percentage of the judgment or settlement. The consumer is not required to repay the company if the consumer does not prevail on or settle the consumer's associated legal claim. The bill also details disclosures that are required as part of a consumer legal funding contract.

The bill prohibits certain actions of consumer legal funding companies and describes how these companies are regulated by the attorney general's office, including registration requirements and associated registration fees and surcharges. The registration fees are credited to a new consumer legal funding cash fund and used to pay the attorney general's costs to implement and administer the bill. The surcharges are credited to the Colorado identity theft and financial fraud cash fund for use in enforcing the "Identity Theft and Financial Fraud Deterrence Act".

The attorney general may fine a company, suspend or revoke a company's license, or prohibit a company from recovering funding fees for violating the bill.

(Note: This summary applies to this bill as introduced.)


Under Consideration


Bill Text


Sponsor Type Legislators
Prime Sponsor

Rep. S. Woodrow
Sen. R. Rodriguez



Upcoming Schedule



1:30 pm  |  HCR 0112
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