Incoming Ill. rep not a fan of lawsuit lenders bill

Jessica M. Karmasek Jan. 6, 2011, 4:22pm


SPRINGFIELD, Ill. (Legal Newsline) - A piece of legislation that some say would expand opportunities for personal injury attorneys was expected to pass out of the Illinois House Judiciary Committee on Thursday.

And one incoming Illinois lawmaker isn't pleased, saying it will be "very detrimental" to job creation in the state.

"I am not opposed to lawsuits that are filed and have merit," said Republican Dwight Kay, who beat out Democratic state Rep. Jay Hoffman in the November election.

"But I don't know why we would want to do something of this nature in this state, especially given our legal climate already."

Meanwhile, the Non-Recourse Civil Litigation Funding Act, or SB3322, would allow funds to be lent to litigants as their case proceeds through the court system and has been criticized as an incentive for meritless lawsuits.

Such loans, according to a recent article in The New York Times, are propelling large and prominent cases. Investment in lawsuits at any given time now exceeds $1 billion, the article stated.

Under the proposed Illinois legislation -- also known as the Lawsuit Loan Shark bill -- lawsuit lenders would not be subject to state consumer loan regulations, which have gotten tougher in recent years under state Attorney General Lisa Madigan's administration. Instead, lawsuit lenders would be under the watch of the Department of Professional Regulation.

Madigan's office was unavailable for comment on the bill Thursday.

Kay, who will be sworn in on Jan. 12, said while he hasn't read the bill in detail, he is disturbed by its concept.

"I don't see any reason why we would want to do that in the state of Illinois," he said of the lending proposal.

He said Illinois is already struggling to keep companies there, much less trying to attract new businesses to the state.

"One of the primary reasons is, we as a state are known by reputation to be very, very lawyer-friendly -- and I'm talking about trial lawyer-friendly," he said.

Cook County, Ill., home of Chicago, came in fifth on the American Tort Reform Association's list of "judicial hellholes" in 2010. The "hellhole" has been on the list every year since 2005.

Kay also questions the motivation behind the bill, particularly his former opponent's.

Hoffman, a 20-year veteran lawmaker, is one of the chief sponsors of the bill in the House. He also is of counsel with the class action firm LakinChapman of Wood River.

"I don't support it because I don't see the need for it," Kay said, simply, of the legislation.

Even the Chicago Tribune, in a recent editorial, slammed the bill, saying it should be "killed."

Loan term disclosure requirements written into the legislation are "mere window dressing," according to the editorial.

"Keep in mind, the investors gambling on the outcome of these lawsuits have no interest in justice," the editorial states.

"As a practical matter, their willingness to speculate tends to increase the volume of shoot-the-moon cases with a small chance of success but a huge potential recovery. They also prolong litigation, by providing an incentive to hold out for an unreasonably high settlement because part of the proceeds already have been pledged."

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