When a Colorado client needs financial help while a civil case is pending, the funding agreement deserves the same careful attention as any other case-related document. Attorneys should understand who is providing the funds, what information must be disclosed, whether the agreement could be discoverable, and whether the funder has any role in strategy or settlement decisions.

Explore funding resources for plaintiff attorneys

This guide explains the law’s practical scope, then separates regulatory requirements from the contract terms and client-protection practices an attorney should review before funding moves forward.

What Colorado Litigation Funding Regulations Cover

Colorado litigation funding regulations should be read in context. Consumer litigation funding generally refers to a non-recourse advance that helps a plaintiff meet essential expenses while a civil case is pending. It is not automatically the same as an attorney fee arrangement, a conventional loan, a settlement advance, or commercial litigation finance. The legal treatment can depend on the parties, the agreement, the source of the funds, and the conduct involved.

One important official source is Colorado HB25-1329, titled Foreign Third-Party Litigation Financing. The Colorado General Assembly bill page says the act requires a foreign third-party litigation funder that enters into a litigation financing agreement to disclose and submit certain information to the Colorado attorney general. It also describes restrictions on using a domestic entity to provide financing to a party or attorney in a civil action. The summary also addresses a funder deciding, influencing, or directing an attorney regarding the conduct, settlement, or resolution of that action. Read the official HB25-1329 summary for the bill’s stated scope and requirements.

That scope matters. The bill summary does not support assuming that every funder, every agreement, or every plaintiff transaction is governed in exactly the same way. It also does not establish a universal interest-rate cap for all litigation funding. Attorneys should confirm the current codified law, the agreement’s structure, and any potentially relevant professional-conduct, confidentiality, fiduciary, discovery, or consumer-protection obligations before advising a client.

State requirements are different from contract terms

A funding agreement may contain terms that come from the funder’s program rather than from Colorado law. For example, The Milestone Foundation describes its pre-settlement funding as 15% simple annual interest and its post-settlement funding as 10% simple interest. Interest never compounds, and the funding is non-recourse, meaning the plaintiff owes nothing if the case loses. Those are Foundation terms, not claims about a Colorado-mandated rate or a safe harbor under Colorado law. The agreement should state the pricing, repayment calculation, and any other material terms clearly, with no hidden fees.

Attorney involvement remains central to a responsible review. The Foundation’s application process requires attorney representation, attorney acknowledgment or approval, and direct verification of case information with counsel. Attorneys can also place Colorado in the broader context of changing state rules by reviewing this overview of state litigation funding regulation.

This article provides general educational information, not legal advice. Colorado attorneys should evaluate the current law and specific facts with qualified counsel when needed.

What Does Colorado HB25-1329 Require of Foreign Funders?

Colorado HB25-1329 addresses foreign third-party litigation financing in civil actions. The enacted bill summary says that a foreign litigation funder entering into a litigation financing agreement must disclose and submit certain information to the Colorado attorney general. The requirement is aimed at transparency around the funder and the financing arrangement. It is not a general statement that every funding agreement has identical obligations, so attorneys should review the current codified law and the facts of the particular matter.

For the official bill summary, status information, and enacted versions, see the Colorado General Assembly page for HB25-1329.

Disclosure and attorney-general submissions

The bill places disclosure and submission duties on a covered foreign funder. In practical terms, counsel evaluating an agreement should identify who is providing the financing. Determine whether the funder falls within the law’s foreign-funder scope, and confirm what information must be disclosed or submitted. The bill page records that the measure became law and that the signed act was dated June 3, 2025. That status history is useful context, but it does not replace review of the operative statutory text, implementing requirements, or later legal developments.

A domestic-entity workaround is prohibited

HB25-1329 also prohibits a funder from using a domestic entity as a means of providing litigation financing to a party or attorney in a civil action. This matters when reviewing corporate structures or contract parties. A domestic entity appearing on an agreement does not, by itself, answer whether the arrangement complies with the law. Counsel should examine the actual financing relationship and the role of each entity rather than relying only on a name, mailing address, or signature block.

The funder cannot direct the case

The bill prohibits a funder from deciding, influencing, or directing an attorney regarding the conduct of the civil action, including its settlement or other resolution. Funding does not transfer litigation judgment from counsel to a financing source. Attorneys should therefore review provisions addressing communications, approval rights, settlement decisions, strategy, and access to case information. The agreement should be evaluated for terms that could create practical pressure or conflict, even when those terms are not labeled as control.

Discovery and consequences for noncompliance

The enacted summary states that a litigation financing agreement is subject to discovery under the Colorado Rules of Civil Procedure and Colorado Rules of Evidence. It also states that an agreement may be void if the funder fails to comply with the applicable activity and disclosure requirements. Such noncompliance constitutes a deceptive or unfair trade practice, and the attorney general may bring an enforcement action. The attorney general may seek fines, prohibit a funder from operating in Colorado, or pursue another appropriate sanction.

These provisions make legal review especially important before signing. This overview is educational, not individualized legal advice. Colorado attorneys should confirm the current codified law, the agreement’s covered parties, and the case-specific implications with qualified counsel.

How Should Attorneys Evaluate a Funding Agreement in Colorado?

A funding agreement deserves the same careful review as any other document that may affect a client’s financial interests, confidentiality, or settlement decisions. The checklist below is a practical starting point, not individualized legal advice. Attorneys should confirm the current law and professional obligations that apply to the specific case, client, funder, and agreement.

1. Identify every party and the funder’s role. Confirm the legal names of the plaintiff, funder, law firm, and any related entity. Determine whether the funder is providing a non-recourse advance, a post-settlement advance, or another form of financing. Ask who will communicate with the client and counsel, who receives repayment, and whether any third party has rights under the agreement.
2. Confirm the purpose and amount of funding. The request should reflect an actual client need and a reasonable amount, not a sales target. Review how the funds will be delivered and whether the agreement restricts their use. Consider whether the requested amount could create unnecessary settlement pressure or make the client’s financial position harder to manage.
3. Read the disclosures and cost terms together. Look for the advance amount, interest rate, calculation method, repayment examples, fees, default language, and any circumstances that could increase the balance. Simple interest should be explained separately from compound interest. For Foundation terms, pre-settlement funding is described as 15% simple annual interest and post-settlement funding as 10% simple interest, with interest never compounding. These are contract terms, not a statement about a Colorado legal cap. There should be no hidden fees. Attorneys can also review the litigation funding disclosure rules overview as general educational context.
4. Check control and settlement authority. The agreement should not give a funder authority to direct litigation strategy, select counsel, approve litigation decisions, or pressure the client or attorney to accept a particular settlement. Identify any consent, notice, or information rights and distinguish ordinary case updates from control over the case.
5. Protect confidentiality and privilege. Determine what case information the funder receives, how it will be stored, who may access it, and whether disclosure could affect confidentiality or privilege concerns. Review proposed authorizations carefully. Share only information that is appropriate for evaluating and administering the funding arrangement.
6. Examine repayment and loss provisions. Confirm when repayment is due, how it is calculated, and what happens if the case resolves for less than expected, remains pending, or loses. Non-recourse funding generally means the plaintiff owes nothing if the case loses. But the agreement should state the protection clearly and identify any exceptions rather than relying on a label.
7. Screen for conflicts and professional concerns. Consider whether the arrangement creates an actual or potential conflict involving the client, attorney, funder, lienholder, or settlement process. Evaluate applicable fiduciary, professional-conduct, consumer-protection, and settlement-related duties with qualified Colorado counsel where appropriate.
8. Confirm the client’s understanding. Before signing, explain the amount received, the total repayment scenarios, the effect of delay, the non-recourse provisions, and the client’s continuing authority over settlement decisions. Invite questions and document that the client had an opportunity to review the agreement independently and make an informed choice.

Does Colorado Law Set a Litigation Funding Interest Cap?

Colorado attorneys should not assume that the state’s current litigation-financing law establishes a universal consumer funding interest cap. The official Colorado General Assembly summary for HB25-1329, the Foreign Third-Party Litigation Financing Act, describes disclosure and conduct requirements for covered foreign funders. It does not state a general maximum interest rate for every consumer litigation funding agreement.

That distinction matters. A bill summary can identify the subjects addressed by legislation, but it should not be stretched into a rate ceiling that it does not contain. Commentary or a comparison with another state’s law also cannot establish a Colorado cap. Counsel should review the current enacted and codified law, the agreement’s structure, and any other potentially relevant Colorado requirements before drawing a legal conclusion.

Questions to ask when reviewing an interest provision

Question	What to verify	Why it matters
Does Colorado law impose a rate cap?	Check current authoritative Colorado law and confirm the funding product’s legal classification.	Different arrangements may be treated differently, and an unsupported assumption can misstate the client’s obligations.
How is the charge calculated?	Identify the stated rate, calculation period, balance used, and whether interest is simple or compounding.	A clear calculation lets the attorney and client estimate repayment without relying on a headline percentage alone.
What happens if the case loses?	Confirm whether the agreement is non-recourse and identify any exceptions in the contract.	Non-recourse terms generally mean the plaintiff owes nothing if the case loses, subject to the agreement’s actual language.
Are there charges beyond interest?	Review fees, costs, repayment examples, disclosures, and any conditions before signing.	No hidden fees and plain-language terms help the client evaluate the real repayment burden.

Separate Colorado requirements from the funder’s terms

The Milestone Foundation’s approved customer terms are not Colorado legal requirements. For pre-settlement funding, the Foundation states a 15% simple annual interest rate. For post-settlement funding, it states 10% simple interest. In both contexts, interest never compounds, and the funding is non-recourse. Pricing, repayment examples, and attorney review should be clear before signing.

Simple interest applies the stated rate to the agreed principal under the contract. Compound interest adds accrued interest to the balance used for later interest calculations. That difference can materially affect repayment over time, so it should be explained in the agreement and discussed with the client. For a broader discussion of transparency, non-recourse terms, and attorney-aligned practices, see ethical consumer litigation funding.

Applications require attorney participation, including representation, acknowledgment or approval, and direct case verification. The attorney and client should still obtain Colorado-specific legal guidance when the facts or agreement raise questions that this general overview cannot answer.

How Non-Recourse Funding Can Support a Client Without Driving Settlement Pressure

A client facing months of litigation may need help with housing, transportation, groceries, utilities, or medical expenses before a case resolves. When financial stress narrows a client’s choices, fair funding can provide breathing room while the attorney continues evaluating the claim and negotiating from the case’s merits. It should support informed decision-making, not encourage a particular settlement outcome.

Under non-recourse terms, the plaintiff owes nothing if the case loses. Repayment is tied to the recovery described in the agreement rather than a personal guarantee or the client’s other assets. That distinction should be explained in plain language before a client signs. Non-recourse funding is not a promise that a case will succeed, that a settlement will be reached, or that an advance will be approved.

What attorney participation protects

Attorney involvement is required for an application. The Foundation expects attorney representation, approval or acknowledgment, and direct verification of case details with counsel. That process gives the attorney an opportunity to assess whether the requested amount is proportionate to the client’s situation. Review how repayment is calculated, and identify concerns involving confidentiality, conflicts, or the client’s understanding of the agreement.

Before signing, the client and attorney should be able to see the funding amount, interest calculation, repayment examples, timing, and any applicable terms. The Milestone Foundation states that its pre-settlement funding uses 15% simple annual interest, that interest never compounds, and that there are no hidden fees. These are the Foundation’s terms, not a Colorado legal requirement. Attorneys should still review the agreement against current law, professional obligations, and the facts of the specific case. The pre-settlement funding for attorneys guide provides additional questions for that review.

The Milestone Foundation is the United States’ first and only 501(c)(3) nonprofit consumer litigation funding organization. Its model is intended as a mission-driven alternative to traditional for-profit funders, with a focus on transparent, simple-interest, non-recourse support. For a broader discussion of ethical consumer litigation funding, attorneys can compare the practical features that help keep client welfare at the center.

Ultimately, funding should help a client endure necessary expenses without turning financial urgency into settlement pressure. Counsel remains responsible for independent legal judgment, and the client should have enough information to make a voluntary, informed decision.

What Should Colorado Plaintiff Attorneys Document Before a Client Applies?

A well-organized application helps counsel evaluate whether funding is appropriate without turning the process into a substitute for legal advice. Before a client applies, gather the information needed to confirm the case, explain the financial terms, and protect the client’s ability to make an informed decision. The following checklist is practical documentation guidance, not a statement of additional Colorado filing requirements.

1. Record the case status and expected path to resolution. Note the case type, parties, current procedural stage, major pending events, anticipated settlement or trial path, and any known liens or obligations that could affect proceeds. The funder should verify case details directly with counsel, so the file should make clear what is known, what remains uncertain, and who is responsible for confirming it.
2. Estimate the client’s likely net proceeds. Document the expected recovery range only if counsel has a reasonable basis for doing so. Account for attorney fees, case expenses, liens, medical balances, and other deductions that may reduce the amount available to the client. Avoid presenting an estimate as a promise or guaranteed outcome.
3. State the requested amount and its purpose. Identify how much the client seeks and whether the funds are intended for essentials such as housing, transportation, groceries, utilities, or medical expenses. A specific request gives counsel an opportunity to consider whether the amount is proportionate to the client’s needs and expected recovery.
4. Prepare a plain-language repayment example. Use the actual requested amount and approved rate from the proposed agreement. Explain that simple interest applies to the original amount rather than adding interest to prior interest. Interest does not compound under the Foundation’s stated terms. This is a review point, not a quote, and the final agreement should state the amount, rate, timing, and conditions clearly. The Foundation describes its funding as non-recourse, meaning the plaintiff owes nothing if the case loses.
5. Review confidentiality, privilege, and conflicts. Before sharing case information, determine what may be disclosed, what protections may apply, and whether the proposed arrangement creates a conflict or affects counsel’s professional obligations. Review the agreement and any disclosure expectations with qualified Colorado counsel when appropriate. Do not assume that confidentiality or privilege questions have one answer in every case.
6. Document the client’s questions and counsel’s acknowledgment. Give the client time to ask about repayment, non-recourse treatment, timing, approval, and how funding could affect settlement decisions. Record that the client received clear terms and that counsel reviewed the application and acknowledged the case information. Attorneys can review the Foundation’s funding resources for plaintiff attorneys before directing a client to apply for funding.

Questions Attorneys Ask About Colorado Litigation Funding Regulations

Is litigation funding legal in Colorado?

Colorado attorneys should avoid treating the phrase “litigation funding” as a complete legal classification. Whether an arrangement is permitted, and which duties apply, can depend on the parties, the agreement, the source of the funds, and the way the transaction is structured. Colorado’s HB25-1329 addresses foreign third-party litigation financing and includes disclosure and activity requirements for covered funders. It does not, by itself, answer every question about every consumer funding arrangement. Review the current law and the agreement’s actual terms before reaching a conclusion.

The Colorado General Assembly’s official bill summary says HB25-1329 became law after being signed on June 3, 2025. Because scope, definitions, and effective provisions matter, counsel should confirm the current codified text rather than rely on a summary or an older article. The Foundation’s litigation funding disclosure rules overview can provide general background, but it is not a substitute for Colorado-specific legal advice.

Can a funder control the case or settlement?

A funding agreement should not give a funder control over litigation strategy, attorney decisions, or settlement negotiations. The official HB25-1329 summary states that the act prohibits a covered funder from deciding, influencing, or directing an attorney regarding the conduct, settlement, or resolution of a civil action. Attorneys should still read the contract closely. Look for provisions addressing communications, approval rights, settlement decisions, access to case information, and any attempt to influence counsel’s independent judgment.

The client’s interests and counsel’s professional obligations remain central. A funder may receive repayment from proceeds under an agreement, but that economic interest should not be confused with authority to direct the case. If a provision is unclear, counsel should seek appropriate Colorado legal guidance before the client signs.

Could the funding agreement be discoverable?

Potentially. The official bill summary says a covered litigation financing agreement is subject to discovery under Colorado rules of civil procedure and evidence. That statement should prompt a careful review of the current statutory language, the agreement, the litigation’s posture, and any applicable privilege or confidentiality issues. Do not promise a client that a funding agreement will remain undisclosed, and do not assume that labeling a document confidential resolves the question.

What should counsel verify before referring a client?

Before a referral, counsel should confirm the funder’s identity and role. Review control and disclosure provisions. Understand the requested amount and repayment calculation. Discuss conflicts, confidentiality, and client comprehension. Verify that the client understands whether the advance is non-recourse, what interest applies, and that interest does not compound. The Milestone Foundation requires attorney participation and case verification. It states its approved terms clearly before signing, with no hidden fees. Those are provider terms, not Colorado legal mandates. A measured review of funding resources for plaintiff attorneys can support the process without replacing individualized legal analysis.

Contact The Milestone Foundation

Frequently Asked Questions

What are Colorado litigation funding regulations?

They are the laws and rules that may govern how litigation funding is structured, disclosed, and administered in Colorado. The current framework should be checked against official Colorado sources because funding agreements can involve state statutes, court rules, professional-conduct duties, confidentiality, and consumer-protection requirements. This article is educational, not individualized legal advice.

Does HB25-1329 apply to every funder?

Not necessarily. The Colorado General Assembly describes HB25-1329 as addressing foreign third-party litigation funders and requiring covered funders to disclose and submit certain information to the Colorado attorney general. Attorneys should confirm the current codified text, definitions, scope, and effective requirements before applying the law to a particular agreement. Colorado General Assembly, HB25-1329.

Can a funder control settlement decisions?

A funder should not direct the attorney’s conduct or decide, influence, or direct a civil action’s settlement or resolution. HB25-1329 states those restrictions for covered funders, but counsel should review the agreement and current law to confirm how the rule applies. The attorney and client retain responsibility for litigation and settlement decisions.

Is litigation funding non-recourse?

Non-recourse funding generally means the plaintiff does not owe repayment if the case loses, subject to the actual written agreement. The Milestone Foundation describes its funding as non-recourse, with interest that does not compound. Terms, repayment examples, and any conditions should be explained clearly before signing.

Should an attorney review the funding agreement?

Yes. Attorney participation is required for an application, including counsel’s approval or acknowledgment and verification of case details. Counsel should review disclosure, confidentiality, conflicts, control, repayment, and client understanding, then confirm the current Colorado requirements and whether additional legal review is appropriate.

Ready to discuss funding for a Colorado case?

Clear terms and attorney involvement can help clients evaluate funding without adding unnecessary pressure to the litigation process. Contact The Milestone Foundation to discuss the next step with your participating attorney and review whether fair, non-recourse funding may fit the case.

Contact The Milestone Foundation.