No ban coming on lawsuit financing in Oklahoma
OKLAHOMA CITY (Legal Newsline) - If any bill passes the Oklahoma Legislature concerning the lawsuit financing industry, it won't include a ban on the practice.
A member of the Oklahoma Chamber of Commerce said Tuesday that Sen. Brian Crain, at its request, withdrew the ban in Senate Bill 1780, which prohibited companies from providing cash to a plaintiff in a lawsuit with the expectation of repayment if the lawsuit were successful.
Plaintiffs did not have to repay the amount given - which the industry argues is not a loan - if the suit failed.
"It's difficult to legislators to outright ban a legal practice," said Mike Seney, the senior vice president of policy analysis and strategic planning for the chamber.
"There were a lot of questions asked about why we don't just try to regulate them. I could see the way the bill was going that it wasn't getting off the Senate floor."
Now, Oklahoma will attempt to become the fourth state to pass a bill regulating the industry, but the two sides of the debate might have trouble reaching a compromise. Seney says he is meeting with Rep. Randy McDaniel, the bill's House sponsor, on Thursday and plans on having a bill ready by April 2.
"We're very willing to sit down with House members to work on the bill to properly regulate the industry," said Eric Schuller, the director of government and community affairs at Oasis Legal Finance.
"We're pleased with the fact that once they heard both sides of the issue, which they were not allowed to have in the Senate hearing, once the senators heard both sides of the issue - that the product does help consumers and does have its place - they agreed that with proper regulation it should be available for the consumers of Oklahoma."
What passed the Senate last week was a shell bill, putting the onus on the House to get a bill together.
Last year, the lawsuit financing industry introduced its legislation in nine states, though none of them passed it. Schuller said those bills would've addressed concerns with the industry, which start with interest rates above what regulated lenders are allowed to charge.
Schuller says his bill caps the amount of fees a customer can be charged after three years.
Seney say the industry's bill "doesn't have any teeth in it at all."
Another criticism of the industry is the amount of influence the company can have on a lawsuit.
"The industry and what it attempts to do, in my opinion, interfere with our civil justice system," Seney said. "If somebody wants to take out a loan or a payday loan, that's fine.
"But when you borrow money against an expected outcome of a lawsuit, and the plaintiff's attorneys often don't even know about it, it interferes with settlements, awards, negotiations and mediations."
Schuller agreed that companies should not be allowed to intervene between the client and its attorney.
Crain did not return a message seeking comment. The matter has been referred to the House Judiciary Committee.
From Legal Newsline: Reach John O'Brien by e-mail at firstname.lastname@example.org.