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If the Business Council of Alabama, big insurance conglomerates like State Farm and Allstate, and big business advocacy group the U.S. Chamber of Commerce (and its Tort Reform affiliate the Institute for Legal Reform) get their way in Alabama, the business of consumer legal funding (lawsuit landing as this coalition likes to call it) will disappear from Alabama.  In fact, recent legislation introduced in the Alabama General Assembly targeting lawsuit lending in truth does just that.  Passed as is, the lawsuit lending legislation (SB 231) would shut down the consumer legal funding industry for good in Alabama, which is the intent of these sponsors.

Lawsuit lending has given Alabama consumers an option to a product that acts as a counterweight to big insurance company delay tactics and low-ball settlement offers for injury claims.  Alabama citizens now have an option when pressured to accept a low settlement offer from the intimidating well-heeled insurance companies. The insurance company motto has been that you can have a fair settlement or a prompt settlement, but not both.  Currently, Alabama consumers can use legal funding to cover immediate personal expenses and wait out the process of obtaining a fair settlement on their injury claim.  

The Business Council of Alabama is the US Chamber of Commerce’s surrogate organization in Alabama.  The Business Council of Alabama was a bit more forthright as to its position on Legal Funding in its newsletter, the BCA Blog.  In its December 9, 2013 Blog, in fact, it stated that “BCA will support efforts to prohibit third-party litigation financing”.  

Why the interest by the Business Council of Alabama and the US Chamber of Commerce to prohibit the product?  Well, their key constituents, the big insurance companies in Alabama and all across the United States, have perfected the science of offering less-then-market rate settlements ("rapid settlements", as Allstate likes to call it internally) with consumers for automobile injury claims.  Insurance companies, such as State Farm and Allstate, have developed systematic methods to delay claims long enough to make injured consumers eager to take a low settlement offer.  Just ask Kim Zilisch her story (or read about it at http://www.phoenixnewtimes.com/...).   These long-standing big insurance company tactics take advantage of injured Alabama citizens who are unable to work and are without a paycheck.  

With consumer legal funding, Alabama consumers who have a pending injury claim can obtain non-recourse funding to help pay for everyday living expenses such as rent, utilities, transportation and food.  These small amounts of funding help alleviate the worries of Alabama consumers' daily financial lives and allows them to pursue a fair settlement for their injury claims with powerful big insurance companies.  And because of the way legal funding is structured, they do not have to pay the legal funding company back if there is no recovery.

Insurance companies, along with the U.S. Chamber of Commerce, whose chairman is conveniently the CEO of State Farm Insurance, are hiring the likes of high-priced lobbyist Thurbert Baker (former Georgia Attorney General) and spending millions of dollars to tell a tall tale to Alabama consumers, the Alabama General Assembly and anyone else who will listen that consumer legal funding is a product that Alabama consumers should not have the choice to have.

Hopefully Alabama General Assembly members will stand up for the freedom of choice that Alabama consumers deserve after faithfully paying their insurance premiums for years.

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Comment Preferences

  •  If you lose your lawsuit, do you still owe (0+ / 0-)

    any money to the lender? If so it sounds like just another vehicle to keep poor people indebted.

    What exactly is your angle anyways? Are you in this industry?

    •  Excellent question. (0+ / 0-)

      No a consumer does not owe anything if they do not recover.  The legal funding company purchases a portion of the claim. if the claim goes to zero, then there is no repayment. The product creates no indebtedness, and the product is used at times to pay off credit card debt, payday debt etc.  And yes, as I disclose in my profile, I am in the legal funding industry.  And feel strongly about not denying poor people access to capital just because insurance companies feel the product will increase the costs of their claim payments.

  •  Good for the BCA. (0+ / 0-)

    If I had my way, Champerty and Maintenance would be felonies once more.

    All allowing for "entrepreneurial lawyering" does is bankrupt society at the expense of lawyers.  The particular litigation investment in question is an effort to beat large settlements out of the insurers, the cost of which would be passed on to all the insured, while the trial bar makes out like bandits.

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