New Yorkers for Lawsuit Reform has sent a memo of opposition to all New York State legislators opposing S.5389/A.7891. This legislation, which purports to protect consumer interests, actually helps to protect the lawsuit lending industry and it could lead to the expansion of this dangerous — and expensive for all New Yorkers — practice.
Lawsuit lenders front money to private plaintiffs engaged in pending litigation for a percentage of any future recovery plus interest. This practice — frowned upon since the ancient Romans — tends to increase settlement values (as plaintiffs have an incentive to “hold out” for more dollars when they realize that a large percentage of their recovery is going to end up in the hands of the lender) and prolong litigation (the interest charged on these lawsuit loans can be quite high so the longer the settlement process, the more money that the lenders make).
NYLR will be launching a grassroots campaign against this dangerous practice. Look for more information soon. In the meantime, click here to download the NYLR memo on the proposed legislation.