Aggressively spinning the truth in a press release about recent legislation in Indiana, Lisa Rickard, the president of the Orwellian named U.S. Chamber Institute for Legal Reform, failed to mention some very relevant real facts. First, the only real interest her organization, and its clients — Big Insurance, has on any regulation of Legal Funding is the very un-free market motive to attempt to ban or restrict this economic option for consumers.
And second, the only reason legal funding has cropped up as a need is because her clients, the professional defendants in auto collision cases, have gotten more aggressive every year in using the financial imbalance of power they have over average Americans to whittle down fair value settlements. Insurance companies are well aware of the financial pressures Americans face when surprise medical bills and loss of income result from an unexpected bad accident. Big insurance companies have used this to their advantage for decades. Legal funding has cropped up as a legitimate free market based solution to even the scales of justice.
In Rickard’s statement, she says the new pending regulation will impose the “same rules as others who provide loans in Indiana”, a statement which also suffers from inaccuracies. First, the insurance industry lobbying effort she has led pushed for and has obtained economics for legal funding providers that are far less than the rates approved for lenders in the state. This is despite having a more consumer friendly product that takes more risk. Indiana lenders charge monthly payments and require borrowers to be personally liable for repayment of all advanced money, interest, default penalties and collection costs. Legal funding requires no consumer monthly payments, never obligates a consumer to make repayments and never subjects them to collection efforts. Legal funding providers only recover their investment if the case they purchase an interest in is successful.
Second, she insists on labeling the product a loan in spite of the clear cut language deliberately chosen by the Indiana General Assembly to distinguish the product from loans. HB1127, sponsored by Indiana Representative Matt Lehman, is crystal clear on this point. Despite the Chamber’s big financial investment to try and get state legislators to call this product a loan, once again independent minded legislators have weighed the evidence and spoken with authority that this product is easily distinguishable from loan products.