Tribeca Capital Group, LLC, Announces Support For New York State Litigation Funding Legislation
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NEW YORK, March 16, 2021 /PRNewswire/ -- Candice Payrovi, Chief Operating Officer of Tribeca Capital Group, LLC, announced the company's support of New York State Assembly Bill No. A03315, which is designed to provide regulation of the consumer litigation funding industry in the state. The bill was introduced by Erik M. Dilan, Assembly District 54. Two similar bills, Assembly Bill No. A01270 and its companion bill in the Senate, No. S00705, are also pending. All bills are currently in committee.
Consumer litigation funding, also called pre-settlement funding or legal funding, offers plaintiffs primarily in personal injury cases a way to access a potential recovery without having to wait the months or years it can take the case to conclude. This non-recourse contract is satisfied exclusively from any recovery amount and only when the case is settled or results in a judgment in the consumer's favor. The amounts can range from a one-time advance of a few thousand to a series of transactions totaling hundreds of thousands of dollars over the length of the litigation.
Litigation finance is a relatively new industry, and states have struggled to characterize these transactions. Some states treat the contract as a loan, even though it strays from the traditional consumer lending model. Others conclude that litigation finance is not a loan at all. Still more have left it up to the courts to sort out.
The Alliance for Responsible Consumer Legal Funding, an organization that describes itself as a coalition of legal funders, consumers, community activists, and policy makers, has long supported sensible regulation that balances the consumer's needs with protecting the litigation funder's investment in the outcome of the case. The New York bills ensure that litigants understand their obligations and what to expect when the litigation is finally concluded. But they also recognize that the level of risk a litigation lender takes on is different from the risk a bank encounters with a traditional borrower.
Both bills set out minimum disclosure requirements to ensure the consumer understands how the advance will be repaid and the fees the funder is charging. They require that the consumer's litigation attorney sign off on the proposed contract and agree to distribute any settlement or judgment award pursuant to its terms. They both also allow the consumer who has a change of heart a generous period in which to rescind the transaction and return the money.
Beyond those similarities, Bill No. A01270/S00705 is more restrictive. It ties a litigation funding company's fees to the federal limit on the annual percentage rate a lender can charge a member of the military, and it prohibits a litigation funding company from assessing a prepayment fee.
COO Payrovi explains, "After a careful review, we believe that Bill No. A03315 does a better job of protecting consumers where it counts most, while at the same time ensuring that they will have maximum access to reputable funding sources. First, it recognizes a growing industry that can provide an often-vital source of support when employment is disrupted or there are no financial resources to pay for medical costs or everyday expenses. Second, we don't need outliers taking unfair advantage of customers and making it difficult for the legitimate and ethical companies to make these advances available quickly. Third, rather than chase away potential litigation funders, the proper regulatory framework can attract ethical and responsible companies. The patchwork of statute and court decisions around the country has led to unpredictable and sometimes conflicting regulation. When a state enacts litigation funding legislation, we don't have to worry about stepping over an invisible line and suffering expensive litigation just to find out what a state considers proper consumer protection parameters."
Tribeca Capital Group, LLC., a leading source of consumer litigation funding, applauds and encourages the efforts of the New York legislature to protect its citizens and to provide much needed regulatory guidance that will allow more consumers to benefit from the financial cushion a litigation funding contract can provide. For more information about these bills, litigation funding transactions, or to contact Candice Payrovi, Chief Operating Officer of Tribeca Capital Group, LLC, please call (866) 388-2288.
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SOURCE Tribeca Capital Group, LLC
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