An Iowa Professor recently published a paper in the Minnesota Law Review calling for appropriate legislation to deal with the growing lawsuit funding business.  The piece discusses the lawsuit funding industry in general and makes some recommendations with regard to the regulation of pre settlement financing as a whole.  More specifically, the author recommends the following:

• Eliminating the legal prohibition against champerty – the legal doctrine that precludes a party to a lawsuit from transferring his/her/its rights under the lawsuit to another entity.
• Extending the protections of the attorney-client privilege to include the lawsuit funder in the relationship.
• Allowing attorneys to work directly with pre settlement loan companies.
• Mandating the inclusion of consumer protection principles to funding contracts.

While it is unclear whether various state legislators would be willing to spend time and resources on regulating this growing industry, it is evident more and more plaintiffs are utilizing these services to help assist them while their lawsuit is pending.

Persons who suffer injury or are otherwise damaged by others and have a case pending under state or federal laws, may be eligible to receive lawsuit funding from a company which offers lawsuit loans to plaintiffs while the  lawsuit is being litigated.  The money can be used at the client’s discretion and need not be repaid if the case is unsuccessful.