On July 1, 2026, Kansas will become one of the newest states to implement comprehensive regulation of Consumer Legal Funding (CLF) when the Transparency in Consumer Legal Funding Act, House Bill 2518, takes effect. The legislation represents something increasingly rare in today’s political environment: a thoughtful public policy solution that earned unanimous bipartisan support in both chambers of a Republican-controlled legislature and was signed into law by a Democratic governor.
At a time when policymakers across the country continue to debate how best to regulate consumer legal funding, Kansas has demonstrated that consensus is possible. Rather than attempting to prohibit access to funding or impose arbitrary restrictions that would eliminate consumer choice, Kansas lawmakers focused on what matters most: protecting consumers through transparency, accountability, and clear rules of the road.
The result is a model statute that should serve as a blueprint for states considering how to regulate CLF.
A Remarkable Bipartisan Achievement
In recent years, legislation involving the civil justice system has often become politically polarized. Yet Kansas lawmakers approached CLF differently.
House Bill 2518 passed unanimously through both the Kansas House of Representatives and Kansas Senate. Republican legislative leaders worked alongside Democratic colleagues to craft legislation that balances consumer protections with continued access to an important financial option for individuals facing economic hardship while pursuing legal claims.
The bill ultimately earned the support of Governor Laura Kelly, a Democrat, who signed the measure into law.
The overwhelming bipartisan support sends a powerful message. CLF is not a partisan issue. Ensuring consumers have access to transparent, regulated financial products while protecting them from bad actors is a goal that lawmakers of every political philosophy can support.
As Representative Susan Humphries, Chair of the House Judiciary Committee, noted following passage of the legislation:
“With the passage of the Kansas Transparency in Consumer Legal Funding Act, consumers in the Jayhawk State can be confident they will benefit from clear regulation and full transparency when accessing financial support for everyday expenses while their legal claims move through the system. This legislation passed with unanimous support, demonstrating that commonsense consumer protections can rise above partisanship. I hope states across the country look to Kansas as a model for how thoughtful, bipartisan legislation can serve both consumers and the integrity of our legal system.”
Her statement captures precisely why Kansas deserves national attention.
Recognizing What Consumer Legal Funding Actually Is
One of the most important features of HB 2518 is that it begins with a clear understanding of CLF itself.
Far too often, CLF is incorrectly lumped together with commercial litigation financing, attorney portfolio financing, or traditional lending products. Kansas lawmakers rejected this confusion and instead adopted a definition that accurately reflects the nature of the transaction.
The legislation explicitly defines CLF as a non-recourse transaction in which a company purchases a contingent right to receive a portion of potential proceeds from a legal claim, and where the funds are used for personal or household expenses. The law further states that CLF is not a loan and is not subject to lending laws.
This distinction is critical.
Unlike a traditional loan, there is no guaranteed repayment obligation. If the consumer does not recover in their legal claim, the funding company receives nothing. The funding company assumes the risk of loss.
By properly defining CLF as a non-recourse transaction rather than a loan, Kansas provides legal certainty while preserving access to a product that serves consumers who often have few, if any, traditional credit options available.
Strong Consumer Protections Without Eliminating Access
One of the reasons Kansas succeeded where other states have struggled is that lawmakers focused on meaningful consumer protections rather than punitive restrictions.
The legislation includes numerous safeguards designed to ensure consumers understand the agreements they enter into and are protected from abusive practices.
Among the most significant protections are:
- A 10-business-day right of rescission allowing consumers to cancel without penalty.
- Plain-language contract requirements.
- Full disclosure of all charges and fees.
- Disclosure of the maximum repayment amount.
- Detailed repayment schedules showing amounts owed over time.
- Attorney review and acknowledgment requirements.
- Prohibitions on misleading advertising.
- Restrictions preventing interference with legal decisions.
- Prohibitions on referral fees and kickbacks.
These provisions represent the type of consumer-focused regulation that policymakers should embrace.
Importantly, the legislation protects consumers without making the product unavailable. Many proposals introduced around the country attempt to regulate CLF through artificial pricing restrictions or loan-style regulations that fail to account for the unique risk structure of non-recourse funding.
Kansas took a different approach. Instead of restricting access, lawmakers prioritized transparency and informed consent.
That approach benefits consumers.
Funding Lives, Not Litigation
A common misconception surrounding Consumer Legal Funding is that it finances lawsuits.
It does not.
CLF provides funds directly to consumers for everyday living expenses while they await resolution of a legal claim. Funds are commonly used for rent, mortgage payments, groceries, utilities, transportation expenses, and medical bills.
Kansas lawmakers recognized this distinction by defining CLF as funds used for household and personal expenses and specifically excluding litigation expenses from the definition.
This distinction reflects the reality experienced by thousands of consumers across the country.
When an individual is injured because of someone else’s negligence, financial pressures often begin immediately. Lost wages, medical expenses, housing costs, and everyday bills do not stop simply because a legal claim is pending.
CLF helps bridge that gap.
As ARC has long stated — Consumer Legal Funding: Funding Lives, Not Litigation.
Kansas lawmakers clearly understood that principle and crafted legislation accordingly.
Preserving Attorney Independence
Critics sometimes suggest that funding companies influence litigation decisions or settlement negotiations.
Kansas directly addressed those concerns.
The legislation explicitly prohibits funding companies from influencing legal strategy, settlement decisions, or any aspect of the underlying legal claim. The law makes clear that these decisions remain solely with the consumer and the consumer’s attorney.
The statute also prohibits referral fees, kickbacks, and financial arrangements that could create conflicts of interest between attorneys and funding providers.
These provisions reinforce a core principle of responsible CLF regulation: legal decisions belong to consumers and their attorneys, not funding companies.
Kansas codified that principle into law.
Transparency Without Overreach
Another notable feature of HB 2518 is its balanced approach to disclosure.
The legislation requires disclosure of the existence of a CLF agreement upon request by parties and insurers involved in litigation. However, it does not require disclosure of the full contract itself. Moreover, communications between attorneys and funding companies used to evaluate claims remain protected from discovery.
This balanced approach addresses transparency concerns while preserving legitimate protections for consumers and their attorneys.
Rather than adopting extreme measures that could expose sensitive financial information, Kansas established a framework that provides notice while respecting privacy and legal protections.
That balance should be carefully studied by policymakers elsewhere.
Meaningful Enforcement Authority
Consumer protection legislation is only effective if it can be enforced.
Kansas recognized this reality by granting enforcement authority to the Attorney General.
Under HB 2518, willful violations can result in civil penalties of up to $10,000 per violation. Violating companies may also lose the ability to recover the funded amount or any charges associated with the transaction.
The legislation also requires funding companies to register with the Kansas Secretary of State.
Together, these provisions create a strong regulatory framework that promotes accountability while maintaining a healthy marketplace.
Why Other States Should Follow Kansas
Kansas succeeded because lawmakers focused on facts rather than rhetoric.
The legislature recognized that CLF serves a legitimate purpose. They acknowledged that consumers benefit from access to non-recourse funding while simultaneously recognizing the need for clear disclosures and strong consumer protections.
The result is legislation that:
- Protects consumers.
- Preserves access to funding.
- Maintains attorney independence.
- Eliminates conflicts of interest.
- Provides meaningful transparency.
- Establishes enforceable standards.
- Clarifies that Consumer Legal Funding is not a loan.
- Avoids unnecessary restrictions that would reduce consumer choice.
Few pieces of legislation achieve such a balanced outcome.
As Senator Kellie Warren, Chair of the Senate Judiciary Committee, explained:
“Last year the Kansas Legislature took an important step and established meaningful transparency in third-party litigation financing agreements. This year our work continued with the enactment of the Transparency in Consumer Legal Funding Act. The Act’s ground-breaking structure and principles ensures for Kansas consumers involved in litigation access to clear and transparent financial transactions relied upon while their legal claims are pending. Unanimous bipartisan support in the legislature makes clear this policy could have success in other states to protect consumers. I was proud to help shepherd this through the Kansas legislative process.”
Her observation is exactly right.
The National Model
As states continue to examine CLF, policymakers should ask a simple question: What does responsible regulation look like?
Kansas has provided the answer.
The Transparency in Consumer Legal Funding Act recognizes the unique nature of CLF as a non-recourse transaction. It establishes robust consumer protections. It preserves access to a valuable financial option. It protects attorney independence. It creates transparency and accountability. Most importantly, it does all of this without eliminating the product consumers rely upon.
Perhaps most remarkably, it achieved unanimous support in a Republican-controlled House and Senate and was signed into law by a Democratic governor.
In today’s political climate, that level of consensus is rare.
It is also instructive.
Kansas lawmakers demonstrated that thoughtful policymaking can transcend partisan divisions when the focus remains on consumers. Their work should serve as a roadmap for legislatures across the country.
For states seeking a balanced approach to Consumer Legal Funding regulation, the message is clear: Look to Kansas.
The Transparency in Consumer Legal Funding Act stands as one of the most comprehensive, consumer-focused, and bipartisan CLF laws in the nation. As it takes effect on July 1, 2026, it offers a proven framework for protecting consumers while preserving access to the financial support many individuals need during some of the most challenging periods of their lives.
Kansas has shown the way forward. The rest of the country should take notice.
