By Michael Shemtoub, trial attorney, Beverly Law. Updated November 2026.
Questions about your injury case?
Leave your name and phone. We call back today, in English or Spanish. The consultation is free and confidential.
Free consultation · English y Español · No fees or costs unless we win
No statute, and two bills that died
New Mexico lawmakers have looked at the subject twice. HB 312, the Litigation Financing Transparency Act, was sponsored in 2025 by Representatives Marian Matthews and Alan T. Martinez. A House committee gave it a “Do Pass” recommendation on March 12, 2025, and the legislature’s record then shows “Action Postponed Indefinitely.” The 2026 version, HB 223, sponsored by Representative Matthews, was not printed and was postponed indefinitely on January 29, 2026.
The 2025 bill would have required lawyers to give copies of financing agreements to the client, opposing counsel and the court within 30 days, barred financiers from steering case strategy or paying referral fees, and made violations unlawful under the Unfair Practices Act, according to the fiscal impact report. The report lists no rate cap. In its analysis of HB 223, the Administrative Office of the Courts raised possible conflicts with the Rules of Professional Conduct and the Rules of Civil Procedure. Neither bill became law, so none of those rules apply now.
The Small Loan Act
New Mexico’s main consumer loan statute is the New Mexico Small Loan Act.
- License. “A person shall not engage in the business of lending in amounts of ten thousand dollars ($10,000) or less” without a license from the director of the Financial Institutions Division (NMSA 58-15-3(A)). The limit rose from $5,000 on January 1, 2023.
- Rate cap. A licensee may not charge an annual percentage rate above 36 percent, figured under the federal Truth in Lending rules and including certain fees (NMSA 58-15-17(J)). An amendment effective January 1, 2023 lowered the cap from 175 percent.
- Loan shape. The same section bars loans with “an initial stated maturity of less than one hundred twenty days” and requires repayment in “a minimum of four substantially equal installment payments,” except for refund anticipation loans.
That last point shows why the fit is uncertain. A lawsuit advance is usually repaid in one lump sum from the settlement, on no fixed date, and only if the case wins. The Small Loan Act was written for installment loans. We found no New Mexico appellate decision, and no published position from the Financial Institutions Division, on whether a non-recourse lawsuit advance is a “loan” under the Act. Courts elsewhere have reached different answers; our page on whether a lawsuit cash advance is a loan walks through them.
Champerty in New Mexico
Champerty is the old rule that a stranger may not pay for someone else’s lawsuit in return for a share of what it recovers. We found no New Mexico appellate decision that applies champerty to a consumer lawsuit advance, either to void one or to approve one. If a dispute over an advance reaches a New Mexico court, that question would be open.
Free case review
Tell us what happened. We will tell you plainly whether there is a case and what to do next. You owe no fees or costs unless we win.
Can a New Mexico lawyer front you money?
New Mexico numbers its ethics rules differently: the rule on conflicts with current clients is Rule 16-108 NMRA, which the court analysis of HB 223 cites. We did not verify the current text of its financial assistance paragraph on an official court site, so we do not quote it here. ABA Model Rule 1.8(e), which many states follow, lets a lawyer advance court costs and case expenses but generally not rent or other living costs. Ask your lawyer what New Mexico allows, and read can my lawyer give me money before settlement.
Your filing deadline in New Mexico
An action “for an injury to the person or reputation of any person” must be brought “within three years” (NMSA 37-1-8). Some claims follow different rules, so confirm your own deadline early. Taking an advance does not extend it.
What to ask before you sign
- Is the company licensed by the Financial Institutions Division? If it says it does not need a license, ask why.
- What is the total payoff at 12, 24 and 36 months, and what annual rate does that equal? Compare it with the 36 percent figure in the Small Loan Act, keeping in mind that no court has said the Act applies.
- Will you owe anything if the case loses or settles for less than the payoff?
- Has your lawyer read the contract? Our page on how much pre-settlement funding costs shows how the payoff grows with time.
Common questions
Is pre-settlement funding legal in New Mexico?
No New Mexico law bans it, and no statute written for it was in force when we checked in November 2026.
Does the 36 percent cap apply to a lawsuit advance?
It applies to loans made by Small Loan Act licensees. Whether a non-recourse advance counts as a loan under the Act has not been decided by a New Mexico appellate court that we found.
Did New Mexico pass the Litigation Financing Transparency Act?
No. HB 312 (2025) and HB 223 (2026) were both postponed indefinitely.
Where do I complain about a lender in New Mexico?
The Financial Institutions Division of the Regulation and Licensing Department licenses small loan companies. Its complaint page has a downloadable complaint form to email with your documents. The division says it “is only able to mediate complaints regarding our licensees,” so check its list of licensees first; the page explains whom to contact if you believe a company is lending without a license (Financial Institutions Division).
Where can I compare New Mexico with other states?
See the laws by state table and the lawsuit cash advance guide. Beverly Law does not offer or arrange lawsuit funding and receives no payment from funding companies. Beverly Law offers a free case review in English or Spanish at (310) 552-6959 if you have questions about your injury case. You owe no fees or costs unless we win.
Ask a question
Not ready to call? Write your question and someone on our team will answer. No cost, no commitment.
Injury lawyer — Beverly Law
Hurt because of someone else in California, Texas and Washington? Talk to an injury attorney. Free, confidential, English or Spanish. You owe no fees or costs unless we win.
Related pages
Cash advance on a lawsuit · Laws by state · Injury law FAQs
Sources
- NMSA 1978, 58-15-3 (Small Loan Act license) (law.justia.com)
- NMSA 1978, 58-15-17 (Small Loan Act rate and loan terms) (law.justia.com)
- NMSA 1978, 37-1-8 (injury deadline) (law.justia.com)
- New Mexico Legislature, HB 312 (2025), Litigation Financing Transparency Act, bill page (nmlegis.gov)
- New Mexico Legislature, HB 312 (2025) fiscal impact report (nmlegis.gov)
- New Mexico Legislature, HB 223 (2026), Litigation Financing Transparency Act, bill page (nmlegis.gov)
- Administrative Office of the Courts, agency analysis of HB 223 (2026) (nmlegis.gov)
- New Mexico Regulation and Licensing Department, Financial Institutions Division (rld.nm.gov)
- New Mexico Regulation and Licensing Department, file a complaint (rld.nm.gov)
Important: This page is general information, not legal or medical advice, and reading it does not create an attorney-client relationship. Every case is different; talk to a lawyer about yours. Texas cases are handled by the firm’s Texas-licensed attorneys, Joyce Ondich and John Efstathiou. Last reviewed: November 7, 2026.