Litigation lending problems discussed in House and Senate committees

Traditionally, civil litigation disputes have been waged between two parties, the plaintiff and the defendant. However today, a third party has joined many lawsuits—the lender who is funding the plaintiff’s ability to sue and hold out for larger payouts.

Many groups, including Missouri’s business community, are concerned about the influence of litigation lenders and are pushing for safeguards to protect consumers and ensure the legal system doesn’t become overburdened with overextended litigation.

Both the Missouri House and Senate are working on proposals to address this issue. In the Senate, a committee heard testimony on Senate Bill 360. The bill’s provisions include limiting the interest rate that litigation lenders can charge, limiting the length of lending contracts and requiring that lenders register with the state, among other ideas.

Bill sponsor Sen. Mike Parson, a Republican from Bolivar, said he sees both sides of the issue. He wants to ensure litigation lenders aren’t causing problems while avoiding excessive new government regulation.

“I do believe there needs to be some sort of regulation for the average person going through a lawsuit because it’s not everyday business,” Sen. Parson told the Senate Committee on Progress and Development.

Former Georgia Attorney General Thurbert Baker also testified at the hearing. Baker is a national expert on litigation lending and is helping lead reform efforts in many states.

He described the litigation industry as “growing by leaps and bounds.” He cited sources noting that the industry today has more than $1 billion invested in lawsuits across the nation.

“It is not a small industry, it is one that has grown tremendously over a number of years,” he said.

Baker told the committee that there is a diverse coalition of interests pushing for litigation lending reform across the country. Business advocates are an important part of that coalition.

“The business community is very much concerned about this because the business community would like to see …. that there are some fair and efficient ways to settle these cases,” Baker said. “We believe that these transactions—and the involvement by third party lenders—tends to extend the length of time that these cases are pending and increases the value and the cost to settle these cases in many instances.”

The Missouri Chamber supports litigation lending reform as a way to ensure Missouri’s litigation environment is not unfriendly to business. This effort ties closely to the Missouri 2030 project, which includes a goal of making Missouri more competitive for job growth. Read the Missouri 2030 plan here: http://www.MO2030.com.

House Bill 512, sponsored by Rep. Elijah Haahr, a Republican from Springfield, would also address this issue. Rep. Haahr’s bill was heard in a House committee on March 9.

Both the House and Senate bills are awaiting committee votes.

For more information about civil litigation legislation, contact Jay Atkins, Missouri Chamber General Counsel and Director of Governmental Affairs at jatkins@mochamber.com or by phone at 573-634-3511.

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About mochamber

The Missouri Chamber of Commerce and Industry understands that the quality of life in our state depends on quality jobs for Missourians. To that end, we have one simple mission: to protect and advance Missouri business.

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