The litigation lending industry is a financial practice that fuels lawsuits by providing “up-front” cash (with sky-high interest rates of up to 200 percent plus additional fees) to individual plaintiffs to cover their legal expenses.
This practice tends to extend the life of litigation, which drives up the cost of litigation and the number of lawsuits filed – all of which is bad for business.
The intent of House Bill 2771 is to rein in lawsuit lending in Missouri by placing reasonable limits on the amount of interest that litigation lenders can charge.
This bill is sponsored by Rep. Phil Christofanelli, a Republican from St. Peters.
“The goal of this legislation is to bring all the stakeholders together to try to put together a regulatory framework that accomplishes a handful of things,” Christofanelli said at the bill’s committee hearing on Tuesday. “One, we want transparency for the consumer. Two, we want to make sure that consumers are not taken advantage of unfairly. Three, we want to preserve the integrity of the legal profession. And four, we want people to be held accountable when they’re bad actors.”
The Missouri Chamber testified in support of the measure.
“Leveraging civil judgments to finance lawsuits is damaging to Missouri’s businesses, consumers and the civil justice system. It increases the cost and duration of litigation. We support this legislation because it provides consumer protection for the litigation lending system,” said Carol Mitchell, Missouri Chamber general counsel.