Predatory ‘Lawsuit Loans’ Rotting New York’s Civil Courts
The New York Post’s recent editorial, “Stop letting the skeevy legal lending industry make bank off New Yorkers,” spotlighted the corrosive effects of third-party litigation financing in New York. As the editorial board points out, this unregulated industry encourages frivolous lawsuits, drives up consumer costs, and burdens businesses and taxpayers alike.
Litigation Funding Fuels Lawsuit Abuse in NYC
This issue is particularly acute in New York City, consistently ranked among the worst “Judicial Hellholes®” in the country – currently sitting in 4th place. The Big Apple’s civil courts are a hotbed for nuclear verdicts and liability-expanding laws that attract opportunistic litigation — enabled and perpetuated by the litigation funding industry.
New Yorkers already pay a steep “tort tax” of $2,318 per person annually due to the state’s poor lawsuit climate. This represents the exorbitant cost of living in a “Judicial Hellhole®,” where every resident bears the burden of an overly litigious environment. Third-party litigation funding only exacerbates this by incentivizing more lawsuits — no matter how meritless or abusive.
The Predatory Lending Practices of Litigation Funders
The New York Post editorial exposes the seedy underbelly of the litigation financing industry. These financing firms will prey on vulnerable plaintiffs with legitimate grievances, then charge them usurious interest rates up to 200%. But lawsuit funders also fuel abusive litigation by plaintiffs’ lawyers chasing a payday rather than justice. With billions in outside funding pouring in, there is little incentive for the personal injury bar to exercise restraint.
Breaking the Litigation Funding Racket’s Grip on New York
New York’s leaders can no longer turn a blind eye to the abusive practices so common among third-party litigation financiers. Curbing this predatory lending scheme that profits off frivolous litigation would be a positive first step toward reforming New York’s rotting civil justice system and reclaiming its reputation from “Judicial Hellhole®” status.
Kudos to the New York Post editorial board for calling out this insidious racket. Now it’s on lawmakers and the judiciary to take meaningful action to protect New Yorkers from becoming the next victims of the litigation funding industry’s greed.
