Is Litigation Funding Legal in Colorado? What Claimants Should Know

Contractors and businesses often ask the same first question: is litigation funding even legal in Colorado? Short answer: Colorado allows third-party funding of legal claims, but consumer advances and foreign funders sit under specific rules your attorney should check.

This page covers Colorado’s key funding rules, the status of federal disclosure proposals, and how Darkwell reviews claims of $10,000 or more. For the broader Colorado hub, see Colorado litigation funding and where we fund.

Colorado claim of $10,000 or more? Request a free claim review.

What Colorado law actually says

• Oasis Legal Finance Group v. Coffman (2015). The Colorado Supreme Court held that companies advancing money to tort plaintiffs for personal expenses in exchange for a share of future litigation proceeds were making “loans” under the Uniform Consumer Credit Code, even when the plaintiff did not have to repay a shortfall if the case recovered less than owed (2015 CO 63). That case is about consumer advances for living expenses, not about every commercial claim-funding model.
• HB25-1329 (2025) — foreign third-party litigation financing. Colorado enacted rules for foreign third-party litigation funders, including disclosure to the Colorado Attorney General, a ban on directing the attorney or settlement, and voiding noncompliant agreements. The bill became law with a Governor signature on June 3, 2025, and an effective date of August 6, 2025 (leg.colorado.gov/bills/hb25-1329).
• Federal transparency proposals. At the federal level, lawmakers have periodically introduced bills that would require disclosure of third-party litigation funding in some civil cases. Those proposals change over time. No federal disclosure bill has become law as of this writing. Confirm current federal disclosure duties with your attorney.

None of this is a license number, a promise of funding, or permission to skip counsel. Darkwell reviews each claim and each state during underwriting.

How this fits Darkwell’s model

Darkwell funds legal claims. We are not a consumer payday lender, and we do not buy or collect consumer debt in states that require a collection license, including Colorado. Your written agreement sets the exact terms.

When funding helps

If the claim is real, counsel costs are the bottleneck, and the other side is well funded, funding can help carry attorney and case costs while your attorney runs the case.

How Darkwell helps

Legal costs are often what stops a good claim. Darkwell helps carry them. On a Colorado claim, that can mean funding the suit or arbitration while your attorney keeps control.

• We help carry the cost. Darkwell funding helps pay for the case, so your operating cash stays in your business.
• We bring attorneys we know. Darkwell has a network of attorneys we know. They help keep costs down while still pursuing the claim. The claim moves forward with an attorney from our network, or your current attorney where it fits.
• Your attorney handles the law. We don’t run your case or choose your legal strategy. Your attorney does that.
• You make a clear decision. The goal is to take the stress out of the fight and make the smart financial decision about your claim.

What to send for a claim review

• Contract or subcontract, and change orders
• Invoices, pay applications, and payment history
• Job address and the owner, GC, or customer name
• Photos, daily logs, and delivery tickets
• Any notices, lien filings, or bond information
• Your attorney’s contact, if you have one

How we get paid

Our fee comes out of the recovery, not your pocket. If there’s no recovery, you don’t repay our funding. Your written agreement sets the exact terms.

Where we work and claim size

We fund business claims, and individual and consumer claims in some states, reviewed state by state where the law allows. We confirm your state during review. See where Darkwell funds claims.

In select cases, we may purchase a business claim outright, where state law allows.

We review claims of $10,000 or more, subject to review and approval by our team.

Darkwell does not buy or collect consumer debt in states that require a collection license, including Colorado.

Common questions

Is litigation funding banned in Colorado? No. Colorado allows claim funding, but consumer personal-expense advances were treated as UCCC loans in Oasis v. Coffman, and foreign funders face HB25-1329 disclosure and conduct rules. Your attorney applies those rules to your facts.

Does Darkwell control my Colorado case? No. Your attorney handles the case and the legal strategy. Darkwell provides funding.

Where can I read the Colorado funding hub? See our Colorado litigation funding page and the Where We Fund map for state-by-state review.

Sources

• Oasis Legal Fin. Grp. v. Coffman, 2015 CO 63
• HB25-1329 Foreign Third-Party Litigation Financing
• Darkwell: Colorado litigation funding
• Darkwell: Where we fund

Colorado claim still unpaid at $10,000 or more? Request a free claim review. Send what you have, and you’ll get a response from our team.

Related reading: Colorado Litigation Funding · Where We Fund · Colorado Mechanic’s Lien Guide · Contractor Not Getting Paid