Lending to plaintiffs began as part of a trend in which banks, hedge funds, and private investors put money into other people’s lawsuits.
[1] Commentators have noted that the industry is free to ignore laws that protect consumers who borrow from other kinds of lenders.
[1] This is an argument that has persuaded regulators in many states, including New York, that lawsuit lenders are not subject to existing lending laws.
[1] The companies and lawyers who support the industry have also lobbied state legislatures to establish rules like licensing and disclosure requirements.
[2] This decision was superseded five years later, when the Ohio General Assembly passed legislation that made lawsuit funding legal.