NY Approves Consumer Litigation Funding Act
Act Implements Regulations for Consumer Litigation Funding
December 23, 2025
New York just implemented a set of common-sense regulations for consumer litigation funding. The Act adds meaningful consumer protections while preserving access to non-recourse capital for injured plaintiffs. And because NY so often sets the tone in consumer finance, this framework may echo well beyond the state’s borders.
On December 19, 2025, Governor Hochul approved the Consumer Litigation Funding Act. The Act applies prospectively (it does not apply to pre-effective-date agreements) and provides a transition period during which a funder that registers with the Department of State in the initial rollout window may keep operating while its registration application is pending approval.
Why the Act matters: for many injured New Yorkers, litigation is slow and life is expensive. Non-recourse funding can be the difference between paying rent and household bills and feeling forced into an early, discounted settlement. NY’s approach recognizes that reality while adding common-sense guardrails that should not hamper responsible funders.
It’s also important for a bigger reason: New York frequently influences the direction of consumer finance regulation nationwide. When NY adopts a workable framework, other jurisdictions often look to it as a reference point.
At a high level, the Act:
Requires consumer litigation funding companies to register with the NY Department of State before doing business in NY
Defines “consumer litigation funding” as a non-recourse transaction (consumers only pay if they recover from their legal claims)
Mandates disclosures and contract terms that will feel familiar to anyone who has worked in other regulated states (clear fee/charge disclosures, rescission rights, attorney acknowledgments, etc.)
A few NY-specific distinctions funders and the plaintiffs’ bar should focus on:
Repayment must be a predetermined amount based on time intervals from funding through resolution, not a percentage of the recovery.
The contract must include a payment schedule listing the funded amount and charges due at the end of each 180-day period, up to the maximum amount due.
Charges to the consumer (above the funded amount) are capped and cannot exceed 25% of the gross amount recovered from the consumer’s legal claim, provided the funder receives an attestation disclosing the gross proceeds for the claim.
For funders, platforms, and law firms, the takeaway is straightforward: NY is open for business, but it’s expecting buttoned pricing, compliance, and operations.
