Last week, the largest national consumer legal funding company, Oasis Legal Finance, announced that it is leaving Tennessee in what is expected to be an exodus of all the national consumer legal funding companies after the insurance industry triumphed in pushing a bill through the Tennessee General Assembly that makes operating in Tennessee too risky and too expensive for legal funding companies.
In a bill that was short on consumer protections and long on protecting the insurance industry from another industry it did not like, the U.S. Chamber of Commerce pushed SB 1360 through the Tennessee House with only 2 votes to spare.
Consumer legal funding allows consumers that are battling with insurance companies (over claims they have for injuries suffered at the hands of defendants represented by these insurance companies) to sell a small fractional interest in the proceeds of their legal claim. These sales happen when consumers consult with their attorneys, and are advised that they should persevere in pursuing their claims versus taking low current settlement offers. Consumer legal funding companies provide these consumers with an alternative economic option to taking immediate settlements that their attorney advise are not in their interest.
Naturally, State Farm, Allstate, USAA and the P&C Insurance Industry in general (pile on industry trade groups NAMIC and PCIAA) are not fans of this product, and have mobilized their large entrenched lobbying force - including the resources of the U.S. Chamber of Commerce - to drive legal funding out of the states where they have clout. They have done this in Tennessee through the adoption of an onerous bill that has anti-business provisions that the U.S. Chamber of Commerce member companies would never want to be subject to themselves.
Read More