Two Georgia cases, one of which is headed to the state’s supreme court, could decide the future of the lawsuit lending industry, Legal Newsline reports in Forbes.
This week, the Georgia Supreme Court announced it would hear Cherokee Funding, LLC v. Ruth. In that case, the court will decide whether lawsuit lending arrangements are investments or loans. If the court finds the latter, high interest lawsuit lending arrangements would be subject to the same rate regulations as other loans. A federal court case in Georgia will also examine whether these arrangements violate the state’s lending laws.
Mary Terzino, a Michigan-based lawyer who has studied the topic, said lawsuit lending “often results in usurious loans.” Some reports have found interest rates on these loans to be as high as 124 percent.