legal funding

The Common Denominator of American Families

America has a reputation of being a melting pot, filled with diverse people. Our country is made up of those differing in race, ethnicity, religion, education, economic opportunity. Yet, there is one thing that most of us all have in common: we aren’t prepared to deal with a financial crisis.

Savings or no savings – the average household remains ill-prepared to withstand a financial setback, according to a recent study released by The Pew Charitable Trusts. Setbacks don’t discriminate—they affect families of all races similarly. Even those with higher incomes can be financially disrupted when facing an emergency.

Unfortunately, many families don’t plan for the unexpected expenses or lost income that could come from being involved in an accident.

The median household does not have enough savings to replace even one month’s income. So, time and time again, families affected by a crisis need options. Consumer legal funding is the lifeline many people need to stay afloat.

A common denominator of American families—we need to be able to access to consumer legal funding if disaster strikes.

Legal Funding

80% of Lawsuits Brought Against Consumers by U.S. Chamber Members–Not the Other Way Around

In a recent article by Joanne Doroshow of the Center for Justice and Democracy at New York Law School, Doroshow pointed out a major hypocrisy with the U.S. Chamber of Commerce. Although they say cases against corporate entities are killing business and clogging the court system–the reality is that the Chamber’s corporate members file the vast majority of all lawsuits:

7% of civil cases (and decreasing every year) [are] brought by sick, injured and harmed consumers against corporate lawbreakers. Of the rest, 80 percent are brought largely against consumers by Chamber members

Tom Donohue, President of the U.S. Chamber said in 2014, “Our Institute for Legal Reform is fighting the expansion of lawsuits on all fronts—in the Congress, in the federal agencies, in the states, and even around the globe where U.S. companies are getting sued.” Yet, as Doroshow states in her article:

The U.S. Chamber itself prides itself on its very own “litigation center,“ which files suit, on average, three times a week.

The American justice system was established to help people with legitimate cases seek redress. Legal funding can help people do that by helping them make ends meet during that process. The U.S. Chamber is concerned with minimizing the number of lawsuits against their member organizations and boosting their bottom line. That’s it. Plain and simple. But, there is a cost to everyday people in this country.

Read more of Doroshow’s article HERE.

Op Ed from Our Executive Director: Judge Alabama Legislation on Results, Not Intent

Steve Jobs used to say there are downsides to everything; unintended consequences to everything. But, in public policy, unintended consequences can be minimized by looking at its potential results—not solely at its intentions. Too often, well-meaning legislation ends up crushing those it was supposed to help. You’ve seen it a thousand times before. And now, it could happen again—to the detriment of everyday people in this state.

State Rep. Chris Pringle is sponsoring HB 395 which aims to enact consumer protections. But, it would have the opposite effect—inflicting massive harm on consumers and consumer choice. Its industry-destroying price controls would force legal funding providers from the state, leaving everyday people in the lurch.

Here’s some background: You probably know someone who’s been given the run-around by an insurance carrier after an accident. For people who’ve been in an accident and are pursuing a legitimate legal claim, consumer legal funding can be an alternative to taking an unfair, lowball settlement offer from an insurance company just because day to day expenses can’t be met.

Legal funding can help pay for rent, utilities, or a car payment—giving people time to settle fairly. With 76% of Americans living paycheck-to-paycheck, a lot of us couldn’t make the bills for months on end, and fight for what’s fair, on our own.

Janet from Mobile needed the option when an insurance company dragged out her claim. “Without access to consumer legal funding, I would have to choose to pay my bills or continue healing… It helped me get my life back,” she said. Will from Huntsville needed it, too. “My lights would have been cut off and I wouldn’t have been able to afford my medicine… When I needed help, legal funding provided it.”

Rep. Pringle’s legislation would unintentionally eliminate people’s ability to access this lifeline by eliminating legal funding providers’ ability to operate. This is not consumer protection. This would hurt everyday working people like Janet and Will.

People need more choices, not less. Eliminating the option doesn’t eliminate the need.

As a former state lawmaker, I know how hard it can be to find ways to protect consumers, implement sensible regulations, and support free market principles at the same time. But, when it comes to legal funding, we did it in Oklahoma.

We brought comprehensive regulation to an industry that had operated without regulation for years by making sure proper consumer protections were put in place, that consumers were empowered to make informed financial decisions, and that bad actors couldn’t operate.

And, it worked. People now have access to a highly competitive market where people can find affordable legal funding if they need it.

Good public policy focuses on outcomes and minimizes unintended consequences. Real consumer protection and maintaining options—Rep. Pringle, these are the results you want.

Rob Johnson is the Executive Director of the Alliance for Responsible Consumer Legal Funding (ARC). He is a former Republican member of the Oklahoma State Legislature who served in the Oklahoma State Senate and Oklahoma House of Representatives.

legal funding

Consumers Speaking Out: Letter to the Editor Runs in The Tennessean

Check out the Letter to the Editor HERE.

Over the Easter weekend, I sat down and watched the video from a Tennessee General Assembly committee meeting from last week where I submitted written testimony. The topic of the hearing was very important to me — something you don’t know about until you need it urgently — consumer legal funding.

In 2013 my husband was hurt in a fall that was not his fault. With over $30,000 in medical bills, we have been so burdened. Everything has a co-pay or a deductible.

In most states, legal funding can help people who’ve been in an accident get money from a potential settlement upfront to cover daily expenses, like medication.

After the accident, we tried desperately to get legal funding and found it impossible. We contacted our legislator and found out that due to a law passed in 2014, it’s almost completely unavailable in Tennessee.

Eventually, we discovered that the insurance industry led a push to eliminate the use of legal funding because it’s an alternative to taking an unfair settlement offer from an insurance company. Everyday people aren’t made of money. Savings run out, and insurance uses this to pressure people into low settlements and increase profits.

They eliminated our option, but not our need.

I urge the members of the Tennessee legislature to stand up to insurance companies motivated by profit and change the law in favor of your constituents. You don’t know how vital access to legal funding is until you need it as a lifeline.

Kathleen Wisenewski, Mt. Juliet 37122

We thank Kathleen for bravely speaking out and for bringing attention to this important issue. Our thoughts are with her family as they go through this trying time. We hope that the Tennessee General Assembly will listen and act.

legal funding

In Tennessee, Consumers Are Shut Out of Choice, Financial Options

From our press release: Games aren’t just being played in Nashville’s Bridgestone Arena—a game of the strong verses the weak is being played just down the street, in the state capitol building. Big Insurance is using its influence and power to prevent consumers access to an important financial tool called legal funding. And in the end, the people of Tennessee are the ones losing out and getting crushed.

Kathleen Wisnewski of Mount Juliet went in search of legal funding after her husband was injured in 2013. With over $30,000 in medical bills, Wisnewski has been under enormous stress to make ends meet. “Everything has a co-pay or deductible. One medicine costs $700, and we’ve started just forgoing treatments. We have no family to lean on. I don’t know how we are going to make it.”

For people who have been in an accident and are pursuing a legitimate legal claim, consumer legal funding can be an alternative to taking an unfair, lowball settlement offer from an insurance company just because they can’t meet their daily living expenses. Insurance companies know legal funding can help normal people settle fairly. So, motivated by profit, they have used their immense lobbying power to quash this consumer-friendly option.

Last month, Tennessee lawmakers refused to forward House Bill 1161, which intended to roll back improper regulation passed in 2014. That legislation effectively barred consumer legal funding from the state by making it all but impossible for providers to operate. The bill, sponsored by Rep. Susan Lynn (R- District 57), would have provided a lifeline to injured consumers inTennessee.

Wisnewski was dismayed when she found out that legislators didn’t forward the bill. “It’s just cruel to refuse us the option. We need someone to help!”

To read more, and check out or other press releases, click HERE.

legal funding

Insurance Predators Maintain Stronghold on Tennessee

Unlike the hockey games played in Nashville’s Bridgestone Arena, games played by the insurance industry in Tennessee are not fun to watch. Because what do special interests do when there is something they don’t like? They kill with overregulation. And, they get their friends to help them do it. In the end, consumers are the ones devoured.

As we’ve talked about before on this blog, insurance companies do not like legal funding because it provides everyday people an alternative to taking unfair, low-ball offers made by insurance companies after an accident. Everyone has a story if it happening a friend, a family member, a neighbor. They are in an accident, out of work, and insurance delays any offer. Then when insurance thinks they are really hurting, they come in with low offer far below what they know they should pay.

Legal funding is an alternative where you can get money from a potential settlement upfront and hold out for a fair offer. Insurance companies don’t like that it eliminates some of their leverage. So they are on a mission to eliminate legal funding.

That’s exactly what they did in Tennessee. In 2014, the insurance industry and their allies pushed legislation through the General Assembly that that drove almost every provider out of state due to overregulation—eliminating the marketplace for consumers who need it.

This week, a bill died in sub-committee that would have been a first step to getting providers to open up access to legal funding in the state. But the special interests wouldn’t let the happen, and killed the bill.

State Farm Insurance, the largest provider of auto insurance in the country, testified in the Tennessee sub-committee against the common-sense rollback of overregulation. In part of the testimony, they spoke against the use of arbitration, which they use in their own contracts, as well as other commonplace business-smart changes that would make it easier for legal funding providers to operate.

The National Association of Mutual Insurance Companies, predictably, also testified against the use of arbitration, though they operate their own arbitration service for their members. They arbitrate disputes for their insurance company members regarding damage to motor vehicles, medical payments, and other claims.

The hypocrisy is hard to watch. But it’s even harder knowing that legal funding providers are getting calls every day from people in Tennessee that need an option. Everyday people who are unwitting players in the insurance industry’s game. Everyday people are the ones who suffer.

Prominent Missouri Think Tank Questions Regulation Falsely Pitched as “Consumer Protection”

A prominent think tank out of Missouri, The Show-Me Institute, recently weighed in on legislation making its way through the Missouri legislature that would severely limit access to legal funding through overregulation. John Wright, a policy researcher for Show-Me, wrote that the legislation is  “pitched as consumer protection, or even tort reform, but it falls short on both accounts.”

We agree with Wright when he says that the proposed regulation of legal funding “appears to ignore the merits of individual lawsuits, making it even more difficult for poor Missourians to pursue legitimate legal claims.” Further, we think it would make it more difficult for MOST Missourians to pursue legitimate legal claims.

With 62% of Americans lacking any emergency savings, many people who are injured in an accident find it hard to pay for extra expenses while they wait for a fair settlement. If they are so injured that they can’t work, making ends meet can become even more difficult.

The real consumer protection is giving people access to a competitive free-market where they can get affordable funding if they need it. People need options, not restrictions.

Read more of The Show-Me Institute blog HERE.

legal funding

IN Gov. Pence Signs Bill Affirming Consumer Legal Funding is the Purchase of an Asset, Not a Loan

From our latest press release:

With the stroke of his pen, yesterday Indiana Gov. Mike Pence affirmed that consumer legal funding is the purchase of an asset—not a loan—and that access to the product is essential for the people of Indiana. HB 1127, sponsored by state Rep. Matt Lehman (R-District 79), will make Indiana the third Uniform Consumer Credit Code (UCCC) state whose legislature has reached this conclusion in recent years. This puts the momentum on the side of legal funding supporters, who have been battling with the insurance industry to preserve consumer access to the product.

Legal funding allows a person with a legitimate personal injury claim sell a portion of their potential settlement for money upfront. Legal funding can help people avoid taking unfair, low-ball settlement offers offered by insurance companies. As a result, the insurance industry and their, proxies, including the U.S. Chamber of Commerce, have been trying to take down legal funding providers state-by-state.

One tactic used by the insurance industry has been trying to wrongfully classify legal funding as a loan. They do this to impose improper regulations on providers—all of them small businesses—and thereby limit consumers’ ability to get funding in their time of need.

Loans and purchases are obviously quite different. Loans require collateral or credit, they receive monthly payments. Default can lead to repossession, damaged credit, or collections. Purchases have none of those characteristics, so legal funding doesn’t either…

Read more HERE.

legal funding

Trending Across the Nation: Legal Funding is Not a Loan

From our latest press release:

Last week, the Indiana legislature passed House Bill 1127, validating that consumer legal funding is not a loan—and shouldn’t be regulated like one. The bill, sponsored by Rep. Matt Lehman, would make Indiana the third UCCC state whose legislature has come to the same conclusion in recent years. “This part of the bill is a major win for consumers. I’m glad they got it right,” said Rob Johnson, former Oklahoma Republican state legislator and Executive Director for The Alliance for Responsible Consumer Legal Funding (ARC). “By passing HB 1127, the Indiana Legislature confirmed that there is a need for consumer legal funding in the Hoosier state.”…

“This is a product that regular working-class people need to be able to access” said Johnson. “Most Americans can’t go months without working. They just don’t have that kind of savings. And, who’s going to give you a loan when you aren’t working and the multi-billion dollar insurance company is slow-waling your claim? We refuse to let people become puppets at the mercy of the insurance industry–allowing them to pull the strings. They use financial pressure to force people into low, unfair settlements for boni fide claims instead of doing what’s right by their neighbor. People are not in good hands if they have no alternative.”

Read the full release HERE.

Another Court Denies Medieval, “Game of Thrones”-Style Legal Concept

From last week’s Bloomberg BNA article by Peter C. Leung:

A U.S. legal dispute over litigation funding provided a glimpse into how English monarchs felt about being sued. (Hint:  they didn’t like it).

Earlier this week, a Delaware court denied E. I. DuPont de Nemours & Co.’s bid to dismiss a case on the grounds that investors are funding the plaintiff’s litigation in exchange for a portion of the winnings. DuPont had argued that the arrangement violated common law prohibitions against champerty and maintenance.

If you don’t know what champerty and maintenance are, you are certainly not alone. Recognizing that the doctrines aren’t particularly well-known in the U.S., the court offered a short explanation.

The doctrines originated in medieval England in response to feudal lords funding others’ lawsuits, the court said. Many times, the suits involved land, with the wealthy investors often targeting political or personal enemies.  The practice lent itself to fraud and “Game of Thrones”-style violence. Sometimes, investors would back false land claims against enemies. Some disputes were settled by combat.

What finally brought about laws against champerty and maintenance was the fact that the crown itself became a target. Thus, common law has prohibitions against assigning a legal claim to a third party who initiates and prosecutes lawsuits, and against “officious intermeddlers” stirring up litigation and encouraging others to bring legal actions or defenses.

Today, there are questions as to whether the doctrines still apply. In the DuPont case, the plaintiff argued that they didn’t but the court disagreed, saying it was a question for the state’s supreme court.  However, with growing interest in ways to monetize intellectual property, including through litigation funding, there may be more analysis of champerty and maintenance ahead. And more history lessons.

Courts are validating, again and again, that legal funding has become a fully accepted part of the personal injury world. This is a huge win for consumers!

Everyday people need help when they are trying to stand up against insurance companies and their armies of lawyers. The insurance companies will promise fair offers and then drag out claims. What’s a person to do without a real-world dragon?

For many, legal funding is an option.

Want to learn more about this case? See Sara Randazzo’s article “Litigation Funder Doesn’t Violate Ethical Boundaries, Court Finds” in The Wall Street Journal’s Law Blog.