Consumer Litigation Financing

What Is It?

“Litigation financing” or “litigation financing transaction” means a nonrecourse transaction in which financing is provided to a consumer in return for a consumer’s assigning to the litigation financier a contingent right to receive an amount of the potential proceeds of the consumer’s judgment, award, settlement, or verdict obtained with respect to the consumer’s legal claim.

Litigation financing does not include:

• Legal services provided on a contingency fee basis, or advanced legal costs, where such services or costs are provided to or on behalf of a consumer by an attorney representing the consumer in the dispute and in accordance with the West Virginia Rules of Professional Conduct;

• A consumer loan, as defined by §46A-1-102 of this code;

• A commercial tort claim, as defined by §46-9-102 of this code;

• A claim under the Workers’ Compensation Law, compiled in chapter 23 of this code; or

• Normal or course of business lending or financing arrangements between an attorney or law firm and a lending institution.

Who Must Register?

A person, business entity, or partnership engaged in the business of litigation financing or a litigation financing transaction must register with Secretary of State per WV Code §46A-6N (Senate Bill 360).

Filing the Registration

A litigation financier must meet the following requirements before transacting business in West Virginia:

• Must be a business entity or partnership registered and in good standing with Secretary of State (If you are unsure if your business is registered or, if registered, unsure of its current status, contact our Business Division.);

• Must state in its organization charter documents or, if a foreign business, its West Virginia certificate of authority registration, a statement that it shall be designated as a litigation financier pursuant to §46A-6N-2;

• Must file with Secretary of State an Application for Registration as a Litigation Financier (Form LF-1) and pay the requisite fee;

• Must file with the Secretary of State and have approved by the Office of the West Virginia Attorney General a surety bond or irrevocable letter of credit issued and confirmed by a financial institution authorized by law to transact business in the state of West Virginia in an amount not less than $50,000 (seeRequired Surety Bond or Irrevocable Letter of Creditsection below for details).

Registration as a litigation financier is in addition to the regular required Secretary of State and State Tax Department business registrations and pay the requisite filing fees.

For example, a foreign (out-of-state) corporation engaged in the business of litigation financing or a litigation financing transaction in this state must file the following:

1. A Certificate of Authority Registration with Secretary of State as a foreign (out-of-state) corporation,

2. An Application for Registration as a Litigation Financier (Form LF-1) (see Required Surety Bond or Irrevocable Letter of Credit below for additional registration information), and

3. A West Virginia State Tax Department Application for a Business Registration Certificate, Form WV/BUS-APP (i.e, application for business license).

If your business or partnership is not registered with the West Virginia Secretary of State, visit one of the links below for more information on how to register the business with Secretary of State.

• Start a WV Business

• Register and Out-of-State (Foreign) Business

Required Surety Bond or Irrevocable Letter of Credit

Pursuant to §46A-6N-2(b) of the WV Code, a litigation financier shall file with the Secretary of State and have approved by the Office of the West Virginia Attorney General a surety bond (Form LF-SB1) or irrevocable letter of credit issued and confirmed by a financial institution authorized by law to transact business in the state of West Virginia in an amount not less than $50,000.

Such bond shall be payable to this state for the use of the Attorney General and any person who may have a cause of action against the obligor of the bond for any violation of this article. The bond shall continue in effect so long as a litigation financier is designated as a litigation financier in the records of the Secretary of State.

Making Changes to Litigation Financier Registration

A litigation financier shall amend its registration with the Secretary of State within 30 days whenever the information contained in such record changes or becomes inaccurate or incomplete in any respect. File the changes with Secretary of State by completing the Amendment to Litigation Financier Registration (Form LF-2) and paying the requisite filing fee (see​ Filing Fees*below).

Important – Read and Know the Consumer Litigation Financing Law

We strongly recommend reading and becoming familiar with the entire text of the law governing consumer litigation financing as the requirements and rules are very specific and extensive in nature. Read the entire text of the WV Code §46A-6N (Senate Bill 360) governing consumer litigation financing.

For further assistance registering as a consumer litigation financier, contact the Business Division.​​