Legal lending is currently an unregulated industry in Missouri, and much of the United States. The Missouri Chamber of Commerce and Industry and other stakeholders are beginning a discussion to bring this practice under a regulatory framework like the rest of the consumer lending industry.
Legal loans are available to plaintiffs to help cover living expenses and other costs as they await a payout from a settlement or verdict. These loans range anywhere from a few thousand dollars, to tens-of-thousands of dollars.
Because the loans are unregulated, interest can compound for years as plaintiffs await the conclusion of their suits. These loans can prolong the length of litigation while greatly diminishing the return for plaintiffs who need the funds the most.
“Lawsuit lenders dodge consumer loan laws because we don’t really have laws that cover them in Missouri,” said Sen. Brian Munzlinger, R-Clarence. “They aren’t covered under banking regulations. There really are no regulations that we have in Missouri.”
Sen. Munzlinger has sponsored Senate Bill 542 which would begin to regulate legal loans.
At a Wednesday hearing on the bill, however, the Missouri Chamber and other stakeholders testified in opposition to Sen. Munzlinger’s bill.
“We applaud Sen. Munzlinger’s efforts to bring forward this legislation and we will continue to work with the senator to bring common-sense reforms to the litigation lending industry,” said Jay Atkins, Missouri Chamber general counsel.
The Missouri Chamber believes that the proposals in the bill aren’t sufficient to protect consumers and ensure these loans are not used to indefinitely prolong litigation to the detriment of Missouri employers.
“It’s not that we don’t think there shouldn’t be regulation, we think that this bill doesn’t go far enough,” said Atkins.
During the hearing, Atkins called for additional protections to be added to the bill, bringing legal lending closer in line with other practices in the loan industry.
Numerous other stakeholders also testified in opposition to the bill while also agreeing that legal loans should be regulated.
The Missouri Chamber will continue to take part in this discussion and seek a strong, fair framework that provides plaintiffs access to credit without compromising future payouts or burdening the legal system with extended delays.
For more information about prevailing wage, contact Atkins at 573-634-3511 or by email at email@example.com.