An injury case in New York City can take years to resolve. Rent and medical bills keep coming, so some plaintiffs turn to pre-settlement funding. Until recently, no New York law specifically governed these contracts.
That changed in June 2026, when New York’s first litigation funding law took effect. New York now caps what a funder can collect from a settlement and gives plaintiffs a clear way to exit a deal. This guide covers what the law requires and what to check before you sign a funding contract in the five boroughs.
New York’s Litigation Funding Act Took Effect on June 17, 2026
Governor Kathy Hochul signed the Consumer Litigation Funding Act on December 19, 2025. On February 13, 2026, Hochul signed a follow-up amendment that moved the rules into New York’s Financial Services Law. That amendment also shortened the name to the Litigation Funding Act.
The law took effect on June 17, 2026, so it doesn’t cover contracts that predate it. It protects New York residents with a claim in a New York state or federal court, including claims not yet filed. A funder also can’t advance more than $500,000 to one plaintiff under the Act.
Every NY Funding Contract Needs Your Attorney’s Written Acknowledgment
Every funding contract now needs a written acknowledgment from the plaintiff’s attorney. In it, the attorney confirms they reviewed the required disclosures with you and work on contingency under a written fee agreement. The attorney also confirms they haven’t received a referral fee from the funder and won’t receive one later.
The acknowledgment has to state that settlement money will flow through the attorney’s trust account or a settlement fund. If the attorney skips that statement, the contract is void.
NYC lawsuit funding from Tribeca already works through the attorney of record, since Tribeca won’t fund a case without the attorney’s approval. Tribeca reviews each case with the plaintiff’s lawyer before it sends a contract.
The Law Caps What a Funder Can Collect From Your Settlement
The cap ties a funder’s total charges to the size of your recovery. Under the Act, you can’t owe more than the amount you received plus 25% of the gross settlement or award.
Say a funder advances $10,000 and your case settles for $100,000. The most you could owe is $35,000, no matter how long the case runs. That figure is a ceiling, so your contract can set a lower amount.
The cap also holds when you take money from more than one funder. A second company can’t knowingly fund the same claim unless it first buys out or pays off the earlier contract. Two or more funders can fund a claim together only if you and your attorney agree in writing, and their combined charges stay within the same limit.
The law also limits repayment to what the claim produces. You owe nothing beyond the available proceeds unless you materially breach the contract or commit fraud against the funder. You pay only after the case is final, any appeals are resolved, and your attorney has received the settlement money.
Your settlement pays your attorney’s lien and any Medicare or other statutory liens before it pays the funder. Funders also can’t charge a penalty if you pay early.
You Have 10 Business Days to Cancel a Funding Contract
Every contract has to include a cancellation right in 12-point bold type. You can back out within 10 business days of receiving the money, as long as you return the full amount.
The contract itself has to be readable, too. The Act requires plain, everyday language and a fully completed contract with no blank spaces at signing. The front page must list the funded amount and an itemized breakdown of every charge. It also needs a payment schedule showing what you’d owe under different case outcomes.
Funders Can’t Control Your Case or Pay for Referrals
The Act keeps settlement decisions with you and your attorney. A funder can ask for case updates, but it can’t influence whether, when, or for how much you settle.
The law also bars referral payments. Funders can’t pay referral fees to lawyers or medical providers, including chiropractors and physical therapists, and can’t accept referral fees from them either. They can’t send you to a specific lawyer, though they can point you to a bar association referral service.
Funders also can’t ask you to waive legal rights, including the right to a jury trial. They can’t use your advance to pay court costs, filing fees, or attorney’s fees. A funder with reason to believe a claim is frivolous can’t fund it at all.
A funder that willfully breaks the law loses its right to collect charges in that case. The Act counts repayment of the funded amount as a charge, so the funder can lose the advance itself. The New York Attorney General can also seek up to $5,000 per violation.
What to Check Before You Sign a Funding Contract in NYC
The Act sets minimum protections, so you still need to read the contract itself. Before you sign, compare the contract against what the Act requires.
- Find the maximum amount you could owe, and confirm it stays within the funded amount plus 25% of the gross recovery.
- Look for the 10-business-day cancellation clause in bold type.
- Make sure your attorney’s signed acknowledgment is part of the contract.
- Ask whether the funder has registered with the New York State Department of Financial Services (DFS) or has an application pending. Registration applications are due by February 13, 2027, and DFS expects its portal to open in mid-December 2026.
Funding is one part of protecting your case’s value. The choices you make in the first weeks after an accident also shape the outcome. This breakdown of common mistakes that can hurt a Manhattan personal injury case covers the ones worth avoiding.
Read the Contract Before You Take the Money
New York’s Litigation Funding Act gives NYC plaintiffs clearer terms and firm limits on what a funder can take. Those protections work best when you read every page before you sign. Talk to your attorney first, and compare any offer with what the law requires.
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