Legal Funding: A Critical Resource For Consumers in New York:
No New Yorker should have to give up on pursuing justice because they can’t afford it. For victims of on-the-job accidents or workplace discrimination, consumer legal funding serves as a vital lifeline to cover the costs of everyday needs such as groceries, medical bills, rent, car payments and student loans while they see their case through.
Key Issues Facing the Legal Funding Industry in New York State
While consumer legal funding serves as a crucial financial resource for victims, New York currently lacks sufficient consumer protections for those who need to access this life-sustaining funding in order to pursue a fair settlement for their injuries. Robust regulation requiring licensure, registration, and disclosure, along with transparent and easy-to-read contracts in the consumers’ first language, are needed to protect consumers from bad actors and ensure access to advances.
Legal Funding Regulation & Legislation in New York
The American Legal Finance Association is dedicated to promoting legislation protecting New Yorkers while ensuring that consumer legal funding remains an accessible option for victims seeking justice. That’s why we’re calling for:
State Regulation of Consumer Legal Funding
Uniform and Easy-To-Read Contracts
Transparent Fees — Know What You Owe
No Referral Fees
No Role In Legal Proceedings
States must require consumer legal funding companies to obtain a license that will be issued by the state following a thorough assessment of character, fitness, and financial stability to weed out bad actors.
Contracts must be uniform, transparent, and written in the recipient’s first language to ensure consumers understand the terms that they are agreeing to before accepting a pre-settlement advance.
Contracts must be transparent regarding fee structure to ensure consumers know up front how much they will be expected to repay if their case is successful.
Prohibit lawyers, law firms, medical providers, and other entities from receiving referral fees, kickbacks, or any other form of financial compensation from legal funding companies
Prohibit consumer legal funding companies from referring consumers to specific lawyers, or having any involvement, including decision-making, in the underlying case.