SB705: Bill Text

2025 - 2026 LEGISLATURE

LRB-1903/1

ARG:cdc

2025 SENATE BILL 705

December 2, 2025 - Introduced by Senators Wanggaard, Pfaff and Marklein, cosponsored by Representatives Tusler, Piwowarczyk, Mursau, Johnson, Steffen and O'Connor. Referred to Committee on Judiciary and Public Safety.

SB705,1,3 An Act to amend 138.04; to create 100.56 and 757.43 of the statutes; relating to: nonrecourse civil litigation advances, prohibiting certain foreign persons from financing civil litigation, and providing a penalty.

Analysis by the Legislative Reference Bureau

This bill 1) imposes certain requirements and restrictions related to transactions in which a company provides funding to a party involved in civil litigation and the funding is to be repaid from the proceeds of the legal action, and 2) prohibits certain foreign persons from financing civil litigation.

Nonrecourse civil litigation advances

This bill creates provisions governing nonrecourse civil litigation advance transactions. Under the bill, a “consumer” is an individual who is or may become a plaintiff or claimant in a civil action or other proceeding (dispute), and a “company” is a person that enters into a nonrecourse civil litigation advance transaction with a consumer. A “nonrecourse civil litigation advance” (advance) is a transaction in which a company makes a cash payment to or on behalf of a consumer who has a pending dispute in exchange for the right to receive an amount out of the proceeds of any realized settlement, judgment, or award the consumer may receive in the dispute. In a nonrecourse civil litigation advance transaction, all of the following apply: 1) there must be a written contract between the company and the consumer governing the transaction; 2) the company may not contract for, or otherwise require, repayment in an amount that would result in a finance charge greater than the prime interest rate plus 10 percent; 3) the company may not advance to the consumer more than $100,000; 4) the consumer may prepay the advance at any time and, upon a prepayment, is entitled to a pro rata reduction in the finance charge imposed; 5) the contract may not provide for repayment of the advance later than 36 months after the contract is entered into; 6) the company may not pay commissions or referral fees to attorneys or health care providers; and 7) the contract must contain specified information, including the annual percentage rate of the finance charge imposed and the consumer’s right to receive a reduction in the finance charge imposed if prepayment is made, as well as provisions that disclose all one-time fees charged to the consumer, disclose the amount to be received by the consumer and the amount the consumer assigns to the company, state that the consumer has a right to cancel the contract within five days, state that the company has no right to make decisions or otherwise participate in the dispute, and state that, except for the consumer’s prepayments, the company may be paid only from the consumer’s proceeds of the dispute and is not entitled to be repaid if there are no such proceeds. Proceeds of the dispute are determined after deducting the consumer’s reasonable attorney fees and costs. A company that violates any of these requirements or restrictions is subject to a civil forfeiture of not less than $25 nor more than $5,000, unless the company establishes that the violation was the result of an unintentional good faith error and the company had in place policies or procedures designed to achieve compliance. If the company’s violation was willful, the company also may not recover from the consumer the advance or any finance charge. The Department of Trade, Agriculture and Consumer Protection has enforcement authority over violations.

Civil litigation financing

The bill prohibits parties in civil actions and their attorneys of record from receiving from a nonparty any amount of money to pay for litigation costs if the money is sourced directly or indirectly from any of the following persons:

1. A foreign state, as defined in the federal Foreign Sovereign Immunities Act of 1976, as amended.

2. A citizen of a foreign state.

3. An agent of a foreign principal, as defined in the federal Foreign Agents Registration Act of 1938, as amended.

4. An investment fund owned or controlled by a foreign state or agent of a foreign principal.

If a court finds that a party or party's attorney has violated this prohibition or has knowingly permitted such a violation, the court may impose a forfeiture on the party or party's attorney in an amount up to the amount of funding sourced from a nonparty in violation of this prohibition, as well as other deterrent sanctions.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

SB705,1 Section 1. 100.56 of the statutes is created to read:

SB705,2,2 100.56 Nonrecourse civil litigation advances. (1) In this section:

SB705,2,4 (a) “Company” means a person that enters into a nonrecourse civil litigation advance transaction with a consumer.

SB705,2,6 (b) “Consumer” means an individual who is or may become a plaintiff or claimant or demandant in any dispute.

SB705,2,7 (c) “Dispute” means any of the following:

SB705,2,8 1. Any civil claim or action.

SB705,2,9 2. Any alternative dispute resolution proceeding.

SB705,2,11 3. Any administrative proceeding before any agency or instrumentality of the state.

SB705,2,15 (d) “Finance charge” means the sum of all charges, including interest, fees, and assigned proceeds from a dispute, payable directly or indirectly by the consumer to the company as an incident to or as a condition of the company’s cash payment described in par. (e).

SB705,2,20 (e) “Nonrecourse civil litigation advance” means a transaction in which a company makes a cash payment to or on behalf of a consumer who has a pending dispute in exchange for the right to receive an amount out of the proceeds of any realized settlement, judgment, award, or verdict the consumer may receive in the dispute.

SB705,2,23 (2) (a) A company may not enter into a nonrecourse civil litigation advance transaction unless there is a written contract between the company and the consumer governing the transaction.

SB705,3,5 (b) A company may not contract for, or otherwise require, repayment of a nonrecourse civil litigation advance in an amount that would result in the finance charge imposed by the company exceeding the weekly prime interest rate for the week prior to the date on which the contract was entered into, as reported by the federal reserve board in federal reserve statistical release H.15, plus 10 percent.

SB705,3,7 (c) A company may not provide to a consumer with whom it has entered into a contract under par. (a) a total amount of money exceeding $100,000.

SB705,3,11 (d) A nonrecourse civil litigation advance may be prepaid by the consumer at any time in whole or in part. Upon a prepayment of the nonrecourse civil litigation advance, the consumer is entitled to a pro rata reduction in any finance charge imposed as part of the nonrecourse civil litigation advance transaction.

SB705,3,14 (3) A contract under sub. (2) (a) may not provide for repayment of the nonrecourse civil litigation advance later than 36 months after the contract is entered into.

SB705,3,15 (4) (a) A contract under sub. (2) (a) shall include all of the following:

SB705,3,19 1. The annual percentage rate of the finance charge imposed under the contract, determined consistently with the provisions of section 107 of the federal Truth in Lending Act, 15 USC 1606, and federal Regulation Z adopted under that act, 12 CFR 1026.

SB705,3,23 2. A statement that the nonrecourse civil litigation advance may be prepaid in full or in part and that, if the nonrecourse civil litigation advance is prepaid, the consumer may receive a pro rata reduction in any finance charge imposed as part of the nonrecourse civil litigation advance transaction.

SB705,4,5 3. On the front page of the contract, a disclosure of the total amount of money to be provided to the consumer and the total amount of money to be assigned by the consumer to the company, described in 6-month intervals for a total period not exceeding 36 months, along with an itemization of all one-time fees to be charged to the consumer.

SB705,4,9 4. A provision that the consumer may cancel the contract, without penalty or further obligation, within 5 business days after entering into the contract if, during this period, the consumer returns to the company the cash payment described in sub. (1) (e) with a notice of cancellation.

SB705,4,13 5. A provision that the company has no right to, and will not, make any decisions with respect to the conduct of the dispute or any settlement or resolution of the dispute and that those decisions remain solely with the consumer and the consumer’s attorney.

SB705,4,15 6. A provision that the company has no right to participate in the prosecution of the dispute or to obtain documents or evidence connected with the dispute.

SB705,4,19 7. A provision that the company accepts only an assignment of an amount of the potential proceeds from the dispute and does not accept an assignment of the consumer’s legal claim. This provision shall also specify that the company has no right to pursue the consumer’s legal claim on behalf of or in lieu of the consumer.

SB705,5,5 8. A provision that, except for any amount prepaid by the consumer, the company may be paid only from the consumer’s proceeds of the dispute and the consumer’s proceeds of the dispute are determined after deducting the consumer’s reasonable attorney fees and costs. This provision shall also specify that the consumer does not owe the company anything if there is no recovery by the consumer in the dispute unless the consumer violates the terms of the contract. This provision shall also specify that, if there are insufficient proceeds to pay the company in full, the company may be paid only to the extent that there are available proceeds from the dispute, unless the consumer violates the terms of the contract.

SB705,5,8 9. A provision that, if the consumer is represented by an attorney, any proceeds from the dispute paid to the company may be paid only from the trust account of the consumer’s attorney.

SB705,5,11 (b) Each provision or disclosure required under this subsection shall be in boldface type and of a type size no smaller than 12-point, except that the provision under par. (a) 8. shall be of a type size no smaller than 15-point.

SB705,5,14 (5) (a) In this subsection, “health care provider” has the meaning given in s. 146.81 (1), but also includes any individual licensed or certified in another state for the same or equivalent profession.

SB705,5,17 (b) A company may not pay or offer to pay commissions or referral fees to any attorney or employee of a law firm, or to any health care provider or employee of a health care provider, for referring a consumer to the company.

SB705,5,19 (6) (a) Except as provided in par. (c), any company that violates this section is subject to a forfeiture of not less than $25 nor more than $5,000 for each violation.

SB705,5,22 (b) In addition to the forfeiture under par. (a), any company that willfully violates this section may not recover from the consumer money advanced to the consumer or any finance charge on that money.

SB705,6,3 (c) It is a defense to a violation of this section if the company establishes that the violation was the result of an unintentional good faith error and, at the time of the violation, the company had in place policies or procedures designed to achieve compliance with this section.

SB705,2 Section 2. 138.04 of the statutes is amended to read:

SB705,6,11 138.04 Legal rate. The rate of interest upon the loan or forbearance of any money, goods, or things in action shall be $5 upon the $100 for one year and according to that rate for a greater or less sum or for a longer or a shorter time; but parties may contract for the payment and receipt of a rate of interest not exceeding the rate allowed in ss. 100.56 (2) (b), 138.041 to 138.056, 138.09 to 138.14, 218.0101 to 218.0163, or 422.201, in which case such rate shall be clearly expressed in writing.

SB705,3 Section 3. 757.43 of the statutes is created to read:

SB705,6,14 757.43 Litigation financing by foreign persons prohibited. (1) In this section:

SB705,6,15 (a) “Agent of a foreign principal” has the meaning given in 22 USC 611 (c).

SB705,6,16 (b) “Foreign state” has the meaning given in 28 USC 1603 (a).