Lawsuit Lending

11/30/-0001

Lawsuit lending is a financial practice that provides “up-front” cash to plaintiffs to cover immediate expenses during litigation. These loans typically come with sky-high interest rates and fees – as much as 200 percent – that can leave borrowers with little to no recovery. Repayment is dependent on the plaintiff recovering some sort of monetary compensation, through either a settlement or verdict. This unscrupulous business practice only leads to prolonged litigation and unjust recovery for a plaintiff and creates conflicts of interest that distort the fundamental nature of the civil justice system.  Read More...

Lawsuit lending can greatly alter a plaintiff’s decision-making process, leading them to reject a reasonable settlement offer for the chance at obtaining a higher verdict in court in order to pay off a high-interest loan. This jeopardizes the chance of any recovery, as litigation could result in a lower than expected verdict or a judgment in favor of the defendant. It also increases costs for defendants, who are forced to endure prolonged litigation.

There is also the ethical concern with inserting a third party into the case that compromises the interests of plaintiffs. It creates conflicts of interests for plaintiffs’ lawyers, who may develop referral relationships with certain lawsuit lenders and be expected to “steer” clients to those lenders.

ILR works to pass legislation that would provide safeguards against abusive lawsuits, and aims to provide transparency to all associated parties during litigation. Funding arrangements are often kept out of the public eye and hidden from parties and judges involved in litigation. The Litigation Funding Transparency Act would not only require third party litigation funding arrangements be disclosed during litigation, but also promote adequate recovery for plaintiffs and provide an overall unbiased civil justice system.

Suggested Resources

Research

All Results for Lawsuit Lending

  1. In the News Today - September 13, 2018

    September 13, 2018 | News

    State-Backed Insurer to Hold Hearings on AOB Abuse; New York Federal Judge Tosses Lawsuit Lending Case... Read More

  2. NYT: Federal Investigation Into Lawsuit Lender/Doctor Scheme is Intensifying

    September 12, 2018 | News

    Federal prosecutors have ramped up their investigation into a scheme organized by lawsuit lenders, lawyers, and doctors that may have "lured women into having pelvic mesh implants removed," The New York Times reports. ... Read More

  3. NYC Bar Committee Chair: Some TPLF Arrangements "Run Afoul" Of Ethics Rules

    August 21, 2018 | News

    Professor Bruce Green, the chair of the New York City Bar's Committee on Professional Ethics, told Legal Newsline in Forbes "that some ways of funding lawyers, financing lawyers, run afoul of the fee-splitting" guidelines.... Read More

  4. A Big Win for Integrity: New York City Bar Association Rules Out Splitting Fees With Investors

    August 16, 2018 | Blogs

    One of the most influential bar associations in the country has voiced a full-throated condemnation of a core element of the litigation funding business model: promising a percentage of anticipated fees in exchange for cash.... Read More

  5. In the News Today - August 16, 2018

    August 16, 2018 | News

    Former Lawyer Charged With Stealing IDs to Apply For Lawsuit Loans... Read More

  6. Lawsuit Lenders Continue to Try to Recover Now-Invalidated Loans

    July 23, 2018 | News

    Lawsuit lenders in the $1 billion National Football League (NFL) concussion settlement continue to try to recover their loans to former players after they were twice invalidated by the judge, Law360 reports.... Read More

  7. Lawsuit Lending Again Rears Its Ugly Head, This Time for Injured Football Players

    July 19, 2018 | Blogs

    Look no further than the National Football League (NFL) concussion settlement as an example, where lawyers, plaintiffs, and the court are engaged in a legal battle that has nothing to do with the settlement's purpose.... Read More

  8. In the News Today - June 28, 2018

    June 28, 2018 | News

    ... Read More

  9. "ILR at 20": ILR President Rickard Sits Down With Corporate Counsel

    June 26, 2018 | News

    This week, the U.S. Chamber Institute for Legal Reform (ILR) is celebrating its 20th anniversary. ILR President Lisa A. Rickard sat for a question-and-answer discussion with Corporate Counsel on the development of the legal landscape during the first 20 years of ILR.... Read More

  10. Law Professor: "Lawsuit Lenders are Like Sharks to Shipwrecks"

    June 21, 2018 | News

    A law professor at Roger Williams University School of Law said "lawsuit lenders are like sharks to shipwrecks" who "capitaliz[e] on tragedy" in a response to a defense of the industry in Crain's New York Business.... Read More