Pre-settlement lenders say rate cap could doom industry

Back to TopCommentsE-mailPrintBookmark and Share

Representatives of businesses that provide pre-settlement funding to plaintiffs said they would be forced out of Indiana by a proposal to cap their returns at 25 percent, after which a House committee advanced a bill that would do just that.

The House Insurance Committee on a 10-2 vote advanced House Bill 1205 that for the first time would regulate cash advances for plaintiffs who have cases pending. The bill defines the business as “civil proceeding advance payment transactions.”

Supporters of HB 1205, including bill author and Insurance Committee Chairman Rep. Matt Lehman, said the bill is aimed at curbing abuses of an unregulated industry in which some plaintiffs have been charged fees equal to annual interest rates of 150 percent or more.

Industry representatives said they back regulation, but that the bill’s proposed maximum return of 25 percent more than an advance – for instance, a $12,500 payback on a $10,000 advance – would put them out of business in Indiana.

Representatives of Oasis Legal Finance and others testified that the industry provides needed cash for plaintiffs facing financial hardship ahead of settlement of their cases. They said the transactions aren’t loans because nothing is owed if a plaintiff doesn’t win a case or receive a settlement. Fees charged reflect the risks of a business in which 10 to 20 percent of advances are losses, they said.

An Oasis representative said the legislation was “an insurance protection bill, not a consumer protection bill.”

But insurance and business groups said the bill is needed to rein in what they said is a predatory business that can deprive litigants of their settlements and prolong litigation.

A State Farm Insurance representative acknowledged the need, but said nothing justified triple-digit interest rates. He also said litigation should “not be turned into a stock market for investors.”

Lehman said after the bill advanced that the 25 percent cap was negotiable.   



Post a comment to this story

We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
You are legally responsible for what you post and your anonymity is not guaranteed.
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in Indiana Lawyer editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
Subscribe to Indiana Lawyer
  1. Great observation Smith. By my lights, speaking personally, they already have. They counted my religious perspective in a pro-life context as a symptom of mental illness and then violated all semblance of due process to banish me for life from the Indiana bar. The headline reveals the truth of the Hoosier elite's animus. Details here: Denied 2016 petition for cert (this time around): (“2016Pet”) Amicus brief 2016: (“2016Amici”) As many may recall, I was banned for five years for failing to "repent" of my religious views on life and the law when a bar examiner demanded it of me, resulting in a time out to reconsider my "clinging." The time out did not work, so now I am banned for life. Here is the five year time out order: Denied 2010 petition for cert (from the 2009 denial and five year banishment): (“2010Pet”) Read this quickly if you are going to read it, the elites will likely demand it be pulled down or pile comments on to bury it. (As they have buried me.)

  2. if the proabortion zealots and intolerant secularist anti-religious bigots keep on shutting down every hint of religious observance in american society, or attacking every ounce of respect that the state may have left for it, they may just break off their teeth.

  3. "drug dealers and traffickers need to be locked up". "we cannot afford just to continue to build prisons". "drug abuse is strangling many families and communities". "establishing more treatment and prevention programs will also be priorities". Seems to be what politicians have been saying for at least three decades now. If these are the most original thoughts these two have on the issues of drug trafficking and drug abuse, then we're no closer to solving the problem than we were back in the 90s when crack cocaine was the epidemic. We really need to begin demanding more original thought from those we elect to office. We also need to begin to accept that each of us is part of the solution to a problem that government cannot solve.

  4. What is with the bias exclusion of the only candidate that made sense, Rex Bell? The Democrat and Republican Party have created this problem, why on earth would anyone believe they are able to fix it without pushing government into matters it doesn't belong?

  5. This is what happens when daddy hands over a business to his moron son and thinks that everything will be ok. this bankruptcy is nothing more than Gary pulling the strings to never pay the creditors that he and his son have ripped off. they are scum and they know it.