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. New York Legislators Take On Lawsuit Lending Industry

    June 05, 2018 | News

    New York State lawmakers are considering three bills to regulate the lawsuit lending industry after a series of scandals in the state, Legal Newsline reports.... Read More

  2. "Who's Behind the Curtain?": Rise of Third Party Litigation Funding

    June 04, 2018 | News

    In a Des Moines Register op-ed, U.S. Chamber Institute for Legal Reform President Lisa A. Rickard said it is "vital that Congress recognizes the need for oversight of" third party litigation funding, "which undermines fairness and ethical practice in our courts."... Read More

  3. In the News Today - May 30, 2018

    May 30, 2018 | News

    NY Lawmakers Considering Lawsuit Lending Bills... Read More

  4. In the News Today - May 29, 2018

    May 29, 2018 | News

    California Senate Considering Bill to Regulate Medical Lawsuit Advertising; Personal Injury Lawyer Made $200K By Pocketing Lawsuit Loans on "Bogus" Lawsuits... Read More

  5. NFL Settlement Judge Invalidates Lawsuit Loans

    May 24, 2018 | News

    U.S. District Judge Anita Brody invalidated all lawsuit loans in the National Football League (NFL) concussion settlement to "prevent breach of the settlement agreement," Law360 reports.... Read More

  6. In the News Today - May 22, 2018

    May 22, 2018 | News

    Pa. Attorney Takes on Former Client, Lawsuit Lender... Read More

  7. In the News Today - May 21, 2018

    May 21, 2018 | News

    Private Equity Firms and Hedge Funds "Found a New Way to Get Richer" By Funding Lawsuits; "Recent Developments Have Let the Air Out of Slack Fill Lawsuits"... Read More

  8. In the News Today - May 16, 2018

    May 16, 2018 | News

    FCC Looking for Autodialer Definition Suggestions After Court Ruling; State Group Calls on N.Y. Government to Act on Lawsuit Lending... Read More

  9. "What Are People Saying About Senate's New Lit Funding Bill?"

    May 15, 2018 | News

    Five days after the Litigation Funding Transparency Act of 2018 was introduced in the U.S. Senate, National Law Journal gathered the thoughts of the legal industry's top members.... Read More

  10. Five Men Charged with Fraud After Running Five-Year, $32 Million Slip-and-Fall Scheme

    May 14, 2018 | News

    Federal prosecutors have charged five men with "a widespread mail and wire fraud scheme" for running a slip-and-fall lawsuit scheme that cost insurers and property owners $32 million over five years, The New York Times reports.... Read More