This week, a new amendment to the West Virginia Consumer Credit and Protection Act takes effect. The Act is one of the primary statutes that governs consumer loans, leases, credit sales, and other transactions in West Virginia. This new amendment creates an added article in the Act. Designated Article 6N, this new law regulates and imposes restrictions on “litigation financiers.”
The amendment defines a litigation financier as any person, entity, or partnership engaged in “litigation financing,” which in turn is defined as
The amendment excludes certain transactions from this definition, such as legal costs advanced by the consumer’s attorney and consumer loans governed by other parts of the Act.
The amendment regulates both litigation financiers and litigation financing transactions. With regard to the financiers, the amendment imposes many requirements, such as the following:
With regard to the transaction, the amendment imposes many requirements, such as the following:
If the requirements are not followed, the consequences can be steep. The amendment provides that any violation of Article 6N shall render the contract unenforceable by the financier, any successor-in-interest, or the consumer.
If you or your company has any involvement in litigation financing, review this amendment. The above lists are just a few of the requirements it imposes. There are many more requirements imposed on the financier, the transaction, and the consumer’s attorney, such as the requirement that any contract be produced in litigation without awaiting a discovery request.