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