Kansas Enacts Consumer Legal Funding Law, Offering a Bipartisan Regulatory Blueprint
Kansas has adopted a comprehensive framework for regulating consumer legal funding, with Governor Laura Kelly signing the Transparency in Consumer Legal Funding Act, House Bill 2518, into law. Commentators have positioned the statute, which takes effect July 1, 2026, as a model for other states weighing how to oversee the fast-growing consumer funding sector.
As reported by the National Law Review, the measure passed unanimously in both chambers of the Republican-controlled legislature before earning the Democratic governor’s signature, a rare show of bipartisan consensus on an issue that has drawn sharp debate elsewhere. The law defines consumer legal funding as a non-recourse transaction in which a company purchases a contingent interest in the proceeds of a legal claim, and it expressly states that such funding is not a loan and is not subject to lending laws.
The statute builds in extensive consumer protections, including a 10-business-day rescission period without penalty, plain-language contract requirements, full disclosure of all charges and the maximum repayment amount, and mandatory attorney acknowledgment. It also bars referral fees and kickbacks, prohibits misleading advertising, and restricts funding companies from influencing litigation decisions.
On transparency, the law requires disclosure of funding agreements upon request by parties and insurers while shielding attorney-funder communications from discovery. Supporters describe that balance as the statute’s central achievement: protecting consumers through disclosure and accountability while preserving access to funding and safeguarding attorney independence, a template lawmakers in other states may look to replicate.
