The legal finance industry provides non-recourse legal financing for litigation. Sometimes these financing are funded from outside the company or from individual lawyers' finances, and then channeled through third party companies. Frequent financing for plaintiffs involved in personal injury, worker compensation, and civil rights. The industry provides cash plaintiffs in cash at once in advance to get a share of future settlements or court decisions. While the litigants are awaiting the settlement of their case, the legal finance industry provides immediate relief from financial expenses such as mortgage payments, rent, medical bills, education bills, daily expenses, or even legal fees.
Video Legal financing industry
History
Legal financing is a fairly recent phenomenon, started in or about 1997. The lending to plaintiffs began as part of a trend in which banks, hedge funds, and private investors put money into other people's lawsuits. Although each case is different, legal finance companies generally only increase 10% to 15% of the probability of completion. On the other hand, legal finance companies charge high fees for the down payment they provide.
The American Legal Financing Association (ALFA) was established in New York City as a nonprofit in July 2004 and represents about 20 national legal funding companies for personal injury victims. The organization's main objective is to set voluntary standards for the legal finance industry, and to advocate on behalf of the industry.
Maps Legal financing industry
Country law
In 2011 the industry lent plaintiffs more than $ 100 million per year and remained unregulated in most states. Commentators have noted that the industry is free to ignore laws that protect consumers who borrow from other types of lenders. The industry, however, insists that they are not lenders because plaintiffs are not required to pay money if they lose their case. Industry refers to transactions as investment, down payment, financing or financing, compared to loans. This is an argument that has convinced regulators in many countries, including New York, that legal lenders are not subject to existing lending laws. Industry firms and lawyers have also lobbied state legislatures to enact legislation such as licensing and disclosure requirements.
In 2003, the Ohio Supreme Court ruled a legal financing agreement. Legal finance company filed $ 7,000 to a woman injured in a car accident. The woman won, and the company was allowed to claim more than $ 30,000 from her future victory. The court refused to allow this, noting that "intermediates are not allowed to gorge over fruit litigation". This decision was superseded five years later, when the Ohio General Assembly passed a law that created a legal lawsuit.
The industry has gained a lobbying victory in many other countries. In Texas, the industry is fighting for a bill introduced in 2005 that will be subject to litigation financing with the same standards as loans. The bill was eventually defeated. There was a similar success in Ohio, where the bill legalized a loan lawsuit that was passed in 2008 with little or no opposition. In 2009, the industry also defeated the efforts of Maryland legislators who will curb lawsuit funding. Maine and Connecticut allow funding of litigation by law, and similar legislation is pending in Kentucky. Furthermore, trials in Texas, Florida, New Jersey, Mississippi, Massachusetts, North Carolina, South Carolina, and New Hampshire have permitted litigation funding contracts.
See also
- Legal financing
- Legal defense fund
- Settlement (litigation)
- Claim
References
Source of the article : Wikipedia
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