Missouri Governor Michael Parson signed an omnibus bill, SB 103, containing sweeping new regulations for the growing industry of consumer legal funding—bringing meaningful oversight of provider companies for the first time in the state’s history.
More Americans than ever are living paycheck to paycheck. With inflation rising and a recession right around the corner—financial pressures on the average family are increasing. And lawsuits aren’t going anywhere, which is why Consumer Legal Funding is a vital and necessary option for average families seeking justice in a legal setting. Yet regulation threatens the availability and effectiveness of Consumer Legal Funding—with the potential to curtail justice for those of modest financial means.
The following piece is a contribution by Charles W. Price, CEO of Capital Now Funding, LLC.
The pre-settlement legal funding industry is often viewed in a negative manner by those outside of the industry, because settlement advances charge higher interest rates than traditional lending methods. The truth is, that without pre-settlement legal funding, those personally injured in accidents that were no fault of their own often do not have the financial means to properly care for themselves following a personal injury accident. Therefore, pre-settlement legal funding plays a vital role by providing much-needed financial assistance for personal injury victims when they have no other options available to them.
Litigation Finance Journal has announced an upcoming roundtable discussion on third-party legal funding. A panel of institutional investors will discuss their thoughts on Consumer Legal Funding as an asset class. This special event will be held April 13 from 11:30 am-12:30 pm EST. Tickets can be found here.
This article was contributed by Eric Schuller, President of the Alliance for Responsible Consumer Legal Funding (ARC).
On October 1, 2020 the California Bar Association published Formal Opinion NO. 2020-204 on Third-Party Litigation Funding.
Much has been made about the interest charged by consumer legal funders in mass tort cases. One study suggests that interest rates are as high as 60%. Some are using such figures as the basis for clamping down on the practice of Litigation Finance, even if that comes to the detriment of those who rely on such funding in the pursuit of justice.
On June 11th, Litigation Finance Journal held a special digital conference on Covid’s impact on the Consumer Legal Funding industry. The panel discussion was moderated by Dan Avnir, Managing Director at Bryant Park Capital. Panelists included Eric Schuller, President of the Alliance for Responsible Consumer Legal Funding (ARC), Kevin Confoy, Chief Risk Officer of GloFin, Paul Galsterer, Founding Partner of The Injury Firm, Lawrence Yablon, Partner at Robinson Yablon PC, and Anthony Sebok, Professor of Law and Co-Director of the Jacob Burns Center for Ethics in the Practice of Law at Benjamin N. Cardozo School of Law.
The common law doctrine that bans champerty has been around since the middle ages. This dark age law prohibiting funding for legal cases by outside parties (who then receive a share of a winning award) is still in place in some parts of the world. But Minnesota is no longer one of those places—earlier this week, the Minnesota Supreme Court abolished the champerty doctrine.
Consumer Legal Funding has been a hot-button issue in Missouri for some time. There has been some concern from industry participants that Missouri may go the way of West Virginia and effectively ban the industry, but it is doubtful the legislature will take up the issue of capping rates on funding transactions in the next legislative session.
After the state of West Virginia amended article 6N of its Consumer Credit and Protection Act this past summer, the litigation funding industry has essentially been prevented from operating in the state. And that’s exactly what industry opponents were hoping for.
The following is a contribution from Eric Schuller, President of the Alliance for Responsible Consumer Legal Funding (ARC).
What is the best way to reduce the amount of companies offering Consumer Legal Funding?
Simple: Put a RATE on it!
In Beyonce’s “Single Ladies (Put a Ring on it),” the lyrics read: “If you like it then you shoulda put a ring on it.” The US Chamber and Insurance Industry are singing a similar tune when it comes to Consumer Legal Funding. However in their song, the lyrics read: “Put a RATE on it.”
The following was contributed by Eric Schuller, President of the Alliance for Responsible Consumer Legal Funding (ARC).
According to Investopedia: “Paycheck to paycheck is an expression used to describe an individual who would be unable to meet financial obligations if unemployed because his or her salary is predominantly devoted to expenses. Persons subsisting paycheck to paycheck have limited or no savings and are at greater financial risk if suddenly unemployed than individuals who have amassed a cushion of savings.”
This article was contributed by Eric Schuller, President of the Alliance for Responsible Consumer Legal Funding.
Montani semper liberi; “Mountaineers are Always Free” is the motto of the State of West Virginia, but apparently the motto only applies to a select group of Mountaineers. The Legislature of West Virginia passed – and the Governor signed into law – Senate Bill 360 which sets out to regulate Consumer Legal Funding in the state. Unfortunately, SB 360 is a set of meaningless regulations, given that the legislation implements rate restrictions on the Consumer Legal Funding Industry which restrict the product from even being offered to the citizens of the state. So in essence, SB 360 bans the product altogether.
