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Read. Follow. Verify.Iowa regulates third-party litigation funding and requires company registration
Last action · March 5, 2026: Subcommittee: Bousselot, Quirmbach, and Schultz. S.J. 489 .
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What This Bill Would Do
Senate File 586 establishes the Third-Party Litigation Funding Transparency Act, setting strict disclosure, contract requirements, and state registration rules for consumer and commercial litigation financing companies effective July 1, 2025.
Litigants and attorneys utilizing third-party financing must now comply with mandatory disclosure rules in civil proceedings, while funding companies face new registration fees, bonding requirements, and prohibitions on influencing legal strategy.
- Third-party litigation funding allows commercial entities or investors to provide capital to plaintiffs or law firms in exchange for a portion of a future settlement or judgment. context
- Senate File 586 is successor legislation to SF 54 and relates to prior proposals such as SF 2419 concerning litigation financing transparency in Iowa. context
Who It Would Affect
Groups the bill's text would affect if enacted, as described in the record. Being affected is not a position for or against it.
Consumer litigation funding companies
Companies must register biennially with the Secretary of State, comply with strict contract disclosure rules, and adhere to prohibitions against interfering in legal claims.
Consumers with legal claims
Consumers receive enhanced contract transparency, a 10-business-day right of cancellation, and protections limiting repayment obligations primarily to available claim proceeds.
Attorneys representing claimants
Attorneys must provide a written acknowledgment regarding funding disclosures and fee arrangements, and are prohibited from having a financial interest in the funding company.
Insurers with a duty to defend
Insurers are entitled to receive disclosures regarding litigation funding contracts within thirty days of a written request.
Key Facts
- The Act applies to any consumer litigation funding, contract, or commercial litigation financing agreement effectuated on or after July 1, 2025.
- Litigation funding companies and commercial financiers must register biennially with the Secretary of State, pay initial and renewal fees, and submit to character and fitness evaluations.
- Registrants may be required to file a bond or post an irrevocable letter of credit in an amount not to exceed one hundred thousand dollars.
- Consumer litigation funding contracts must be written clearly, contain consumer initials on each page, include a 10-business-day right of cancellation without penalty, and detail all charges.
Show all 10 facts
- Contracts must include a written acknowledgment by the consumer's attorney; if this acknowledgment is missing, the contract is null and void.
- Funding companies are prohibited from paying referral fees to attorneys or health care providers, attempting to waive a consumer's right to a trial by jury, or influencing legal strategy and settlement decisions.
- Willful violations by a funding company require the waiver of the right to recover the funded amount and charges, plus a civil penalty of not more than one hundred thousand dollars per violation.
- Consumers must disclose the existence of a litigation funding contract to any party to a legal claim and each defending insurer within thirty days of a written request.
- Commercial litigation financiers must submit an annual report to the Secretary of State by December 31 detailing funding counts, summed funded amounts, and annual percentages charged.
- Commercial financiers and consumer funding companies are prohibited from entering agreements directly or indirectly with a foreign entity of concern or foreign country of concern.
Frequently Asked Questions
What is considered a consumer litigation funding transaction?
Can a litigation funding company dictate how a legal claim is settled?
Are litigation funding contracts discoverable in civil proceedings?
What else do you want to know?
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Votes, people, money & the original sourceWhere This Stands
Currently passed chamber. The next step in the legislative lifecycle is Law.
Procedural history
27 actions- Mar 5, 2026SenateSubcommittee: Bousselot, Quirmbach, and Schultz. S.J. 489 .
- Mar 5, 2026SenateCommitteeReferred to Ways and Means. S.J. 479 .
- Feb 23, 2026SenateCommittee report, approving bill. S.J. 368 .
- Feb 23, 2026SenateIntroducedIntroduced, placed on calendar. S.J. 354 .
- Feb 23, 2026SenateCommittee report approving bill, renumbered as SF 2419 . S.J. 368 .
- Feb 4, 2026Iowa LegislatureSubcommittee recommends passage.
Show 21 earlier actions
- Feb 3, 2026Iowa LegislatureSubcommittee Meeting: 02/04/2026 10:30AM Room 315.
- Jan 21, 2026SenateSubcommittee: Bousselot, Blake, and Schultz. S.J. 123 .
- Jan 14, 2026SenateCommitteeReferred to Judiciary. S.J. 69 .
- Jan 14, 2026Iowa Legislature* * * * * END OF 2025 ACTIONS * * * * *
- Apr 9, 2025Iowa LegislatureSubcommittee recommends amendment and passage.
- Apr 8, 2025Iowa LegislatureSubcommittee Meeting: 04/09/2025 8:30AM Room 217 Conference Room.
- Mar 26, 2025SenateSubcommittee: Rowley, Dotzler, and Sweeney. S.J. 653 .
- Mar 18, 2025SenateCommitteeReferred to Ways and Means. S.J. 553 .
- Mar 10, 2025SenateCommittee report approving bill, renumbered as SF 586 . S.J. 473 .
- Mar 10, 2025SenateCommittee report, approving bill. S.J. 473 .
- Mar 10, 2025SenateIntroducedIntroduced, placed on calendar. S.J. 463 .
- Mar 3, 2025Iowa LegislatureSubcommittee recommends amendment and passage.
- Feb 25, 2025Iowa LegislatureTabled until future meeting.
- Feb 25, 2025Iowa LegislatureSubcommittee Meeting: 02/26/2025 4:00PM Room 217 Conference Room.
- Feb 17, 2025Iowa LegislatureSubcommittee Meeting: 02/25/2025 12:30PM RM 102.
- Feb 17, 2025HouseSubcommittee reassigned: Lawler, Nordman and Wilburn. H.J. 340 .
- Feb 11, 2025HouseSubcommittee: Lawler, Gustoff and Wilburn. H.J. 290 .
- Feb 6, 2025HouseIntroducedIntroduced, referred to Judiciary. H.J. 253 .
- Jan 27, 2025Iowa LegislatureSubcommittee Meeting: 01/29/2025 12:00PM Room 315.
- Jan 23, 2025SenateSubcommittee: Rowley, Blake, and Schultz. S.J. 135 .
- Jan 16, 2025SenateIntroducedIntroduced, referred to Judiciary. S.J. 104 .
Version history
Only one version on file - nothing to compare yet. As later stages (committee substitute, engrossed, enrolled) are captured, the redline appears here.
View official text →Lobbying Activity
No state lobbying filings in our records match this bill. Federal lobbying reports (LDA) cover Congress, so they are not listed on state bills.
Full breakdown
Who this bill affects and the strongest case for and against it, written only from the bill’s own text.
Discoveries
Patterns POLISCOPE noticed across the record. These are observations to investigate, not conclusions.
Establishment of State Oversight for Litigation Finance
The bill shifts litigation funding from an unregulated commercial practice to a state-registered industry under the purview of the Secretary of State.
Connected Entities
Sources
www.legis.iowa.gov
Analysis Score
0–100- Significance75How much this matters to a regular citizen
- Controversy65Intensity of disagreement among stakeholders
- Entertainment10Compellingness for a non-policy-wonk reader
- Buzz40Current news / social attention level
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