Legislation on lawsuit funding

Emerging lawsuit funding legislation protects consumers against personal injury funders

Significant legislation has emerged in recent years barring the predatory lending practices of personal injury lawsuit funders. In a typical personal injury lawsuit financing transaction, someone who has suffered a personal injury and is pursuing a legal claim for the injury on a contingency fee basis, seeks financial assistance from a third party during the cases progression. The financial assistance is usually for living or medical expenses, rather than legal costs.

Legislation regarding personal injury financing transactions differ from commercial litigation finance as practiced by Legalist in the purpose and terms of financing. While personal injury financings generally are for the purpose of funding living costs and price based on monthly interest rates, similar to a loan, commercial litigation funding transactions are based on percentages and fixed return amounts, rather than interest rates, and are extended towards businesses and sophisticated individuals for the purposes of covering legal costs. Commercial litigation funding transactions have not been subject to significant legislation due to its similarity to attorney contingency stakes, which don't implicate vulnerable populations.