Crain’s: Litigation Financing’s Dark Side: Vulture Capitalism

Crain’s New York Business has published a letter from LRANY’s Adam Morey that unveils the dark side of litigation financing.

An excerpt:

Law firms may be celebrating the rise of third party lawsuit financing (“Great equalizer coming to New York law,” op-ed), but outside of the commercial realm, the practice has a more troubling dark side: Consumer lawsuit loans take advantage of those who have already been injured.

Just this year New York Attorney General Eric Schneiderman filed a complaint against a consumer litigation financing firm for cheating 9/11 first responders and brain-injured NFL players out of settlement funds. Another lender is currently being sued in Georgia federal court for allegedly charging interest rates over 100%, which would violate lending laws there. Because New York has no consumer protection laws subjecting lawsuit loans to rate caps, the lawsuit cash-advance industry charges unconscionably high interest rates and speculates on lawsuits. It’s vulture capitalism for the legal system.”

Read Full Letter Here

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