HB 5281 Michigan House · 2025-2026 Regular Session

Financial institutions: other; third-party litigation funding transparency; provide for. Creates new act.

HB 5281, the "Third-Party Litigation Funding Transparency Act," regulates third-party funding of civil lawsuits by requiring funding companies to register with the state, disclose all terms to clients, and cap fees at 36% annually. It directly affects litigation funding companies and attorneys who use these services, mandating clear disclosure of costs and prohibiting hidden fees. The bill excludes pro bono nonprofits, health insurers, and traditional loans from its rules, focusing specifically on commercial funding arrangements where funders share in lawsuit proceeds. It establishes civil penalties for violations and gives state officials authority to enforce these requirements.

Bill status passed both 4 of 5 stages cleared

Introduction

Nov 2025

Committee Review

May 2026

House Passage

May 2026

Senate Passage

May 2026

Governor

Introduced Nov 12, 2025 Last action May 14, 2026

Maddy AI version diff · 3 comparisons

What changed between versions

As Passed by the House → Substitute (H-1) · 1 edit

MINOR

The bill text was reformatted to replace the 'As Passed by the House' version with a 'Substitute' version, indicated by a change in the document header from (H-4) to (H-1). This change reflects a procedural update where the bill has been amended by the House committee, but the substantive policy language regarding third-party litigation funding remains unchanged.

TECHNICAL

The document header was updated to reflect the substitute version (H-1) instead of the original passed version (H-4), indicating that the text has been amended but no substantive policy content was added, removed, or modified.

House Introduced Bill → As Passed by the House · 8 edits · May 12, 2026

MODERATE

The bill was reformatted from a House Introduced version to a version passed by the House, resulting in significant text reorganization and the addition of new definitions and restrictions. Key substantive changes include the addition of a 36% annual cap on funding charges, the inclusion of specific exemptions for banks and attorneys who provide services, and new requirements for contract disclosures and attorney acknowledgments. The bill also introduces stricter rules against foreign entities of concern and mandates that funding contracts be voided if attorneys fail to provide specific written acknowledgments.

Scope change

The bill's scope was expanded to explicitly include banks and lenders as exempt entities under the consumer litigation funding company definition, while simultaneously adding new prohibitions on foreign entities of concern and requiring specific attorney acknowledgments to validate contracts.

FISCAL

Added a strict cap limiting total charges to 36% annually.

DEFINITION

Added new definitions for 'Foreign entity of concern' and 'Foreign country or person of concern' to restrict dealings with sanctioned nations.

ELIGIBILITY

Added exemptions for banks, lenders, and attorneys who provide services to consumers, distinguishing them from regulated funding companies.

REQUIREMENT

Added mandatory written acknowledgments from attorneys confirming they reviewed disclosures and received no referral fees.

Added a requirement that consumer litigation funding contracts be void if the required attorney acknowledgment is not provided.

Added a prohibition on prepayment penalties or fees in consumer litigation funding transactions.

Added a requirement that contracts be void if the consumer seeks more than one funding contract from the same company without disclosing cumulative charges.

TECHNICAL

Changed the bill title capitalization from 'HOUSE BILL' to 'House BILL' and removed page numbers and internal markup codes.

Floor votes · House May 12, 2026

How they voted

This bill passed the Senate by voice vote (no roll call recorded).

Full legislative history

Actions timeline

Total actions

Key actions

Committee

May 14, 2026

Committee

REFERRED TO COMMITTEE ON REGULATORY AFFAIRS

upper

May 14, 2026

Upper · Passed

PASSED BY HOUSE WITH IMMEDIATE EFFECT

upper

May 12, 2026

Lower · Passed

passed; given immediate effect Roll Call #137 Yeas 60 Nays 45 Excused 0 Not Voting 5

lower

Apr 30, 2026

Lower · Passed

substitute (H-4) adopted

lower

Apr 30, 2026

Committee

referred to second reading

lower

Apr 30, 2026

Lower · Passed

reported with recommendation with substitute (H-4)

lower

Apr 28, 2026

Committee

referred to Committee on Rules

lower

Apr 15, 2026

Committee

referred to second reading

lower

Apr 15, 2026

Lower · Passed

reported with recommendation with substitute (H-1)

lower

Nov 12, 2025

Committee

referred to Committee on Judiciary

lower

Nov 12, 2025

Introduced

introduced by Representative Rep. Mike Harris

lower

1 primary · 24 co-sponsors