Texans For Lawsuit Reform is highlighting recent moves by New York state legislators who are advancing legislation aimed at regulating the third-party consumer litigation funding industry.
On its website, Texans For Lawsuit Reform posted an article by Josefa Velasquez that recently appeared in the New York Law Journal. It discusses the Lawsuit Reform Alliance of New York’s lobbying efforts to regulate the controversial industry.
“The litigation lending industry arose in the 1990s as part of a trend in which investors, including hedge funds, individuals and banks bet on the outcome of other people's lawsuits, while at the same time lending to plaintiffs,” Velasquez said in his article. “Only about 11 states have regulated any aspect of it, according to Reuters.”
Velasquez said the Alliance is backing legislation that would place a cap on the consumer litigation lending industry.
“The Alliance is pushing for a bill, sponsored by Republican state Sen. Rob Ortt of Niagara Falls, S03911A, which would cap the interest rate for the consumer litigation lending industry at 16 percent, which is New York's civil usury cap, or 25 percent for certain lenders licensed in the state,” Velasquez writes. “Meanwhile, the Democratic-dominated Assembly is proposing its own bill, A06827A, to regulate the industry. While the bill, sponsored by Assemblyman Michael Simanowitz of Queens, doesn't cap the interest rate, it would require transparency about fees from lending companies.”
Velasquez goes on to say in the article that there is much “behind-the-scenes” lobbying going on as well, which is attempting to regulate the industry.