Last week I wrote about LawCash and Oasis Legal Finance being challenged in Colorado over their legal settlement funding approach.
Yesterday the New York Times ran with a look at the legal settlement funding or lawsuit lending industry. It’s an interesting article worth reading.
Ernesto Kho had pressing needs of his own. Medical bills had piled up after he was injured in a 2004 car accident. So he borrowed $10,500 from Cambridge Management Group, another company that lends money to plaintiffs in personal-injury lawsuits. Two years later, Mr. Kho, a New Jersey resident, got a $75,000 settlement — and a bill from Cambridge for $35,939
“It takes advantage of the meek, the weak and the ignorant,” said Robert J. Genis, a personal-injury lawyer in the Bronx who said that he had warned clients against borrowing. “It is legal loan-sharking.”
To fortify its position, the industry has started volunteering to be regulated — but on its own terms. The companies, and lawyers who support the industry, have lobbied state legislatures to establish rules like licensing and disclosure requirements, but also to make clear that some rules, like price caps, do not apply.
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