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Pre-settlement lenders say rate cap could doom industry

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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.   






 

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  1. I gave tempparry guardship to a friend of my granddaughter in 2012. I went to prison. I had custody. My daughter went to prison to. We are out. My daughter gave me custody but can get her back. She was not order to give me custody . but now we want granddaughter back from friend. She's 14 now. What rights do we have

  2. This sure is not what most who value good governance consider the Rule of Law to entail: "In a letter dated March 2, which Brizzi forwarded to IBJ, the commission dismissed the grievance “on grounds that there is not reasonable cause to believe that you are guilty of misconduct.”" Yet two month later reasonable cause does exist? (Or is the commission forging ahead, the need for reasonable belief be damned? -- A seeming violation of the Rules of Profession Ethics on the part of the commission) Could the rule of law theory cause one to believe that an explanation is in order? Could it be that Hoosier attorneys live under Imperial Law (which is also a t-word that rhymes with infamy) in which the Platonic guardians can do no wrong and never owe the plebeian class any explanation for their powerful actions. (Might makes it right?) Could this be a case of politics directing the commission, as celebrated IU Mauer Professor (the late) Patrick Baude warned was happening 20 years ago in his controversial (whisteblowing) ethics lecture on a quite similar topic: http://www.repository.law.indiana.edu/cgi/viewcontent.cgi?article=1498&context=ilj

  3. I have a case presently pending cert review before the SCOTUS that reveals just how Indiana regulates the bar. I have been denied licensure for life for holding the wrong views and questioning the grand inquisitors as to their duties as to state and federal constitutional due process. True story: https://www.scribd.com/doc/299040839/2016Petitionforcert-to-SCOTUS Shorter, Amici brief serving to frame issue as misuse of govt licensure: https://www.scribd.com/doc/312841269/Thomas-More-Society-Amicus-Brown-v-Ind-Bd-of-Law-Examiners

  4. Here's an idea...how about we MORE heavily regulate the law schools to reduce the surplus of graduates, driving starting salaries up for those new grads, so that we can all pay our insane amount of student loans off in a reasonable amount of time and then be able to afford to do pro bono & low-fee work? I've got friends in other industries, radiology for example, and their schools accept a very limited number of students so there will never be a glut of new grads and everyone's pay stays high. For example, my radiologist friend's school accepted just six new students per year.

  5. I totally agree with John Smith.

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