Foreign Third-Party Litigation Financing

The act requires a foreign third-party litigation funder (funder) that enters into a litigation financing agreement (agreement) to disclose and submit certain information to the Colorado attorney general. The act prohibits a funder from:

• Utilizing a domestic entity as a means of providing litigation financing to a party or attorney in a civil action;
• Deciding, influencing, or directing an attorney with respect to the conduct of the civil action or any settlement or resolution of the civil action;
• Assigning rights to profits other than the right to receive a share of the proceeds awarded in the civil action as outlined in the agreement; or
• Sharing proprietary information, or information affecting national security interests obtained as a result of the agreement for the civil action, with anyone who is not a party or an attorney.

The act subjects an agreement to discovery under the Colorado rules of civil procedure and Colorado rules of evidence.

The act deems an agreement entered into by a funder void if the funder fails to comply with the activity and disclosure requirements. A funder's failure to comply with the requirements of this act constitutes a deceptive or unfair trade practice. The act allows the attorney general to bring legal action against a funder to enforce compliance with the act, impose fines, prohibit a 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.

The act requires the department of law to include information about funders in its annual "SMART Act" hearing annually, beginning in January 2026.

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