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.

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.

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.