Report: Ind. lawmaker eyes lawsuit lending regulations

By Jessica M. Karmasek | Dec 10, 2013

INDIANAPOLIS (Legal Newsline) -- An Indiana lawmaker says he wants companies who lend money to plaintiffs waiting for a lawsuit settlement to have to register with the state, among other things.

State Rep. Matt Lehman, a Republican, told the The Journal Gazette that some lawsuit lending companies are taking advantage of plaintiffs.

"There is probably a necessity for this industry. People need to pay bills. At the same time, there is desperation here and consumers are making bad choices," he told the newspaper.

"A 100 percent return is ridiculous."

Lawsuit lenders typically seek out plaintiffs and offer them up-front money to cover immediate living or medical expenses while their cases are pending.

These loans are usually provided at high interest rates -- often more than 100 percent -- and then must be paid back to the lender once the plaintiff's claims result in a settlement or judgment.

Tort reform groups, including the U.S. Chamber of Commerce's Institute for Legal Reform, argue that such lending is a serious problem: it increases litigation costs, crowds court dockets, diminishes recoveries for injured consumers and threatens to erode client control over lawsuits.

ILR owns Legal Newsline.

Indiana's Chamber of Commerce agrees, and has listed the regulation of lawsuit lending as its top legislative priority during the next session.

The state Chamber argues that the practice, while legal in most states, complicates the legal process by forcing more cases to go to trial because the plaintiffs can't afford to settle due to their repayment agreement with the lender.

In turn, it causes more Indiana businesses to pay expensive legal fees.

Both the state Chamber and Lehman argue that regulation and transparency are needed.

According to The Journal Gazette, Lehman's legislation would require lenders to register with the state and certain disclosures. Also, the lawmaker wants to cap interest rates.

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

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