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What This Matrix Covers
Pre-settlement funding is legal in all 50 U.S. states — but the legal framework that governs it varies dramatically. Roughly a dozen states have enacted dedicated consumer legal-funding statutes that require registration, disclosure, and in some cases fee caps. The rest operate under general common-law contract and consumer-protection rules with no industry-specific regulation. This matrix is the plaintiff's, attorney's, and funder's quick reference to which regime applies where, current as of January 2026.
Nothing in this matrix is legal advice. Statutes change; the "regulated" column below reflects the presence of a dedicated funding statute, not whether every provision applies in every scenario. When compliance matters, consult counsel and the actual statutory text.
Reading the Matrix
- Framework: The primary source of regulation — dedicated statute or general common law.
- Industry statute: Whether the state has enacted funding-specific legislation. "Yes" means registration, disclosure, or price rules apply.
- Notes: Case-law history, recent enforcement, or peculiarities worth flagging.
The Full 50-State Matrix
| State | Framework | Industry statute | Notes |
|---|---|---|---|
| Alabama | Legal — no dedicated statute | None | Common-law champerty largely inactive; consumer funding enforceable |
| Alaska | Legal — no dedicated statute | None | No appellate case has voided a consumer funding agreement |
| Arizona | Legal — no dedicated statute | None | No industry regulation; UDAP enforcement possible |
| Arkansas | Regulated — Arkansas Code § 4-57-101 et seq. | Yes | Registration and fee disclosure required |
| California | Legal — no dedicated statute | None | Consumer-funding enforceable; not treated as a loan |
| Colorado | Regulated — Uniform Consumer Credit Code as applied | Yes (contested) | Oasis v. AG litigation history; disclosure regime applies |
| Connecticut | Legal — no dedicated statute | None | Common-law framework governs |
| Delaware | Legal — no dedicated statute | None | No industry statute |
| Florida | Legal — no dedicated statute | None | Common-law tort/contract framework |
| Georgia | Legal — no dedicated statute | None | No industry statute |
| Hawaii | Legal — no dedicated statute | None | No industry statute |
| Idaho | Legal — no dedicated statute | None | No industry statute |
| Illinois | Regulated — Consumer Legal Funding Act 815 ILCS 121 | Yes | Registration, disclosure, cost caps |
| Indiana | Regulated — IC 24-12-1 et seq. | Yes | Registration and disclosure; some rate limits |
| Iowa | Legal — no dedicated statute | None | No industry statute |
| Kansas | Legal — no dedicated statute | None | No industry statute |
| Kentucky | Legal — no dedicated statute | None | No industry statute; common-law framework |
| Louisiana | Legal — no dedicated statute | None | No industry statute |
| Maine | Regulated — 9-A MRSA § 12-101 et seq. | Yes | Registration and disclosure required |
| Maryland | Legal — no dedicated statute | None | No industry statute |
| Massachusetts | Legal — no dedicated statute | None | No industry statute |
| Michigan | Legal — no dedicated statute | None | Common-law framework |
| Minnesota | Legal — no dedicated statute | None | No industry statute |
| Mississippi | Legal — no dedicated statute | None | No industry statute |
| Missouri | Legal — no dedicated statute | None | No industry statute |
| Montana | Legal — no dedicated statute | None | No industry statute |
| Nebraska | Regulated — Neb. Rev. Stat. § 25-3301 et seq. | Yes | Registration and disclosure required |
| Nevada | Regulated — NRS 604C.100 et seq. | Yes | Fee cap and disclosure regime |
| New Hampshire | Legal — no dedicated statute | None | No industry statute |
| New Jersey | Legal — no dedicated statute | None | Non-recourse advances treated distinct from loans |
| New Mexico | Legal — no dedicated statute | None | No industry statute |
| New York | Regulated — GBL § 481 et seq. (2023 reform) | Yes | Registration + comprehensive disclosure regime |
| North Carolina | Legal — case-law framework | None (contested) | 1st Fin. v. Yeagerts historically hostile; modern practice permissive |
| North Dakota | Legal — no dedicated statute | None | No industry statute |
| Ohio | Regulated — Ohio Rev. Code § 1349.55 | Yes | Registration and disclosure required |
| Oklahoma | Legal — no dedicated statute | None | Common-law framework |
| Oregon | Regulated — ORS 646.395 et seq. | Yes | Disclosure regime |
| Pennsylvania | Legal — no dedicated statute | None | Champerty largely dormant; consumer funding enforceable |
| Rhode Island | Legal — no dedicated statute | None | No industry statute |
| South Carolina | Legal — no dedicated statute | None | No industry statute |
| South Dakota | Legal — no dedicated statute | None | No industry statute |
| Tennessee | Regulated — Tenn. Code § 47-16-101 et seq. | Yes | Registration and disclosure |
| Texas | Legal — no dedicated statute | None | Non-recourse framework permissive |
| Utah | Regulated — Utah Code § 13-57-101 et seq. | Yes | Registration and disclosure |
| Vermont | Regulated — 8 V.S.A. Ch. 74 | Yes | Registration and cost caps |
| Virginia | Regulated — Va. Code § 59.1-556 et seq. | Yes | Registration and disclosure |
| Washington | Legal — no dedicated statute | None | No industry statute |
| West Virginia | Regulated — W. Va. Code § 46A-6N-1 et seq. | Yes | Rate caps and disclosure |
| Wisconsin | Legal — no dedicated statute | None | No industry statute |
| Wyoming | Legal — no dedicated statute | None | No industry statute |
The Regulated States: What Their Statutes Typically Require
The dozen-plus states with dedicated pre-settlement funding statutes have converged on a common set of consumer-protection features, though the specifics vary. Common elements include:
Registration or licensure
Funders must register with a state agency — typically the attorney general, the department of financial institutions, or a specialized consumer-credit regulator — before offering advances to plaintiffs in the state. Registration usually involves financial disclosures, bond requirements, and periodic renewal.
Written disclosure at contract execution
Every advance must be documented on a state-form or state-approved disclosure that spells out the amount funded, the fees, the total repayment schedule, and the plaintiff's right of rescission. Rescission windows are typically five to seven business days.
Attorney acknowledgment
The plaintiff's attorney must acknowledge the assignment in writing before funds are disbursed. This is standard industry practice even in unregulated states, but the regulated states codify it.
Prohibited practices
Most statutes prohibit funders from directing or interfering in the underlying litigation, from paying referral fees to attorneys, from advertising in misleading ways, and from soliciting plaintiffs directly at hospitals or accident scenes.
Rate treatment
Rate treatment varies most. Some states impose hard caps on the effective rate or total repayment (Nevada, Vermont, West Virginia); others require disclosure without capping (New York, Ohio, Tennessee, Virginia); still others rely on a general unconscionability check without specific ceilings (most).
The Unregulated States: What Actually Governs
In roughly three-quarters of the country, no dedicated statute governs pre-settlement funding. Instead, three general legal doctrines shape enforceability:
Non-recourse structure
Pre-settlement funding is structured as a non-recourse advance rather than a loan. If the case fails, the plaintiff owes nothing. This structural feature typically takes the transaction outside usury and lending statutes, which generally apply only to obligations that must be repaid regardless of outcome.
Champerty and maintenance (largely dormant)
Common-law champerty (funding another's lawsuit in exchange for a share of recovery) and maintenance (encouraging litigation for one's own gain) survive in many states as historical doctrines. Modern courts have consistently distinguished between (a) speculative funding of commercial litigation, and (b) consumer funding of existing plaintiff cases. The consumer-plaintiff bucket has largely been treated as outside the champerty concern. For a state-specific example, see our Pennsylvania guide.
Unconscionability and consumer protection
Every state's consumer-protection statute (typically a UDAP — Unfair or Deceptive Acts and Practices — law) applies to pre-settlement funding agreements. State attorneys general and courts can invalidate contracts that are unconscionable or that involve deceptive practices, even in the absence of a dedicated funding statute.
Recent Legislative Trends
Three trends have shaped the state landscape over the past five years:
New York's 2023 reform
New York enacted a comprehensive consumer legal-funding statute in 2023 (Gen. Bus. Law § 481 et seq.) that established a registration regime, standardized disclosure requirements, and codified the non-recourse nature of the product. New York is one of the largest personal-injury markets in the country, and the reform is influential nationally. See our companion piece on state guides for cross-state comparison.
Continued state-by-state activity
Roughly half a dozen states have considered or enacted funding-specific legislation in the past three years. The pattern is consistent: disclosure, registration, sometimes rate caps. Outright prohibition has not been seriously proposed anywhere.
Industry standardization efforts
The American Legal Finance Association (ALFA) and the Alliance for Responsible Consumer Legal Funding (ARC) have promoted voluntary standards, standardized contract forms, and industry codes of conduct that in many respects anticipate or exceed statutory requirements. Reputable funders comply with these standards even in unregulated states.
What This Means for a Plaintiff
The state where the case sits determines both the enforceability of a funding agreement and the disclosures the plaintiff should expect to receive. Regardless of state:
- Read the contract. Total repayment, monthly rate, and any cap should be printed prominently. If they are buried, walk.
- Confirm the attorney's acknowledgment. No reputable funder disburses without it.
- Check for a rescission window. Even in unregulated states, most reputable funders offer at least a five-day right of rescission.
- Verify registration in regulated states. A funder operating in Illinois, Indiana, Nevada, New York, Ohio, or the other regulated states should be able to provide its registration number on request.
- Ask about the total cost. Simple vs compounding interest, hard cap vs no cap, and add-on fees can double the effective cost of an advance. See how pre-settlement funding actually works for the rate mechanics.
The Interaction with the Underlying Case
Regardless of state, funding is repaid at settlement out of the plaintiff's net share of the recovery. It is not paid by the attorney or by the defendant directly. For the arithmetic of how funding fits alongside attorney fees and liens, see our companion pieces on funding and medical liens and settlement distribution math. For a look at what factors drive the size and rate of an offer, see the 12 underwriting factors. Attorneys evaluating funding fit for a client can review the process at our attorney resources page.
The Bottom Line
The state where your case sits shapes both what you should expect at contract execution and what recourse you have if something goes wrong. Regulated states offer more consumer protection by default; unregulated states depend on the funder's own practices. In either case, the reputational and practical costs of dealing with a bad-actor funder are high — for plaintiffs, attorneys, and the industry itself. Choosing a funder with clear disclosures, standard practices, and a track record is more consequential than the specific state regime.
If your case is filed anywhere in the U.S. and you want a fair pre-settlement offer with plain-English disclosure, apply for an advance. We are transparent about rates, caps, and total cost in every state — regulated or not.
Frequently asked questions
Yes. Every U.S. state permits non-recourse consumer pre-settlement funding. Roughly a dozen states have dedicated statutes; the rest operate under general contract and consumer-protection law.
Illinois, Indiana, Nevada, New York, Ohio, Tennessee, Virginia, and West Virginia have among the most detailed frameworks. Registration and comprehensive written disclosure are typical.
Champerty is the common-law doctrine against funding another's lawsuit for a share of recovery. Many states still recognize it in principle, but modern courts have consistently allowed consumer pre-settlement funding of existing plaintiff cases.
No — only in the states with dedicated funding statutes. In the unregulated states, funders operate under general commercial law.
The transaction is governed by general contract, tort, and consumer-protection law. Non-recourse advances are typically enforceable under those doctrines. Unconscionable pricing can still be challenged.
Almost universally, no. Non-recourse advances repayable only from settlement proceeds are treated differently from loans and generally fall outside state usury and lending laws.
In regulated states, yes — periodic reporting is typical. In unregulated states, only if a specific complaint or investigation arises.
Yes. Newly enacted statutes typically apply prospectively to new advances rather than retroactively to existing agreements, though the specifics vary.
