Maryland House Bill HB1298

Maryland 2026 Regular Session

• Introduced: 2/12/26
• Refer: 2/12/26

Caption

Third-Party Litigation Financing - Licensing and Regulation

Impact

One of the key impacts of HB 1298 is the introduction of strict disclosure requirements for litigation financing contracts. Parties engaged in civil actions will have an obligation to disclose any financing agreements to all involved parties, including insurers. This requirement aims to ensure that all stakeholders are aware of potential financial influences on the case's outcome and promotes clarity in legal proceedings. This provision positions consumers to make more informed decisions about entering into financing contracts, especially when outcomes are financially contingent.

Summary

House Bill 1298 is a legislative proposal aimed at regulating third-party litigation financing in Maryland. The bill establishes a framework for licensing litigation financiers, prohibiting those not licensed under relevant financial regulations from providing such financing. It defines litigation financing as a loan, thereby subjecting it to existing regulations that govern loans and consumer protection. This legal change is designed to enhance consumer safety and transparency by ensuring that consumers have access to critical information about financing agreements without unnecessary complexity.

Contention

Notably, the bill has sparked discussions regarding its implications for consumers and the broader legal framework. Proponents argue that it protects consumers from predatory financing terms and increases fairness in legal proceedings. However, critics express concerns that stringent regulations may limit access to necessary funding for individuals seeking justice. They fear that requiring licenses and imposing comprehensive disclosure may make it more challenging for consumers to secure financing, potentially disadvantaging those with limited financial resources.