A bill that would regulate the litigation financing industry in New York cleared the Senate Commerce Committee this week — a development cheered on by the Lawsuit Reform Alliance.
The bill, backed by Sen. Anna Kaplan, seeks to regulate the decades-old industry that allows for lending to finance lawsuits. The bill would require new disclosures for consumers for transaction fees and caps charges similar to what is allowed under federal law. The bill also includes a 10-day right of rescission as a consumer protection and requires companies in the industry to register applications with the New York Department of State.
“Today’s action to advance a bill to combat predatory lawsuit lending is an important first step to ensure that vulnerable New Yorkers are no longer exploited by this unregulated sector of the finance industry. To further reduce harm to individuals and protect the integrity of the civil justice system, the bill also ensures that lawyers do not have overlapping financial interest in lending outfits, or arrangements to collect lucrative referral fees,” said Lawsuit Reform Alliance Executive Director Tom Stebbins.
“I commend bill sponsors Senators Kaplan and Ortt, Committee Chair Senator Thomas, and the members of the committee for standing up for consumers and working to ensure that injured parties are not re-victimized by litigation loan-sharks. We hope to see the state Assembly take up similar legislation before the end of the legislative session.”