Canary spoke to the House Financial Services Committee in support of HB 160, sponsored by Rep. Chris Pringle, R-Mobile, and to the Senate Banking and Insurance Committee in support of SB 68, sponsored by Sen. Cam Ward, R-Alabaster.
“The Business Council of Alabama, working with the U.S. Chamber of Commerce’s Institute for Legal Reform, fully supports SB 68 and HB 160, as introduced by Senator Ward and Representative Pringle,” Canary said.
As part of its 2015 State Legislative Agenda’s Judicial and Legal Reform, the BCA supports efforts to provide meaningful regulation in order to protect the interests of consumers and the public.
View the BCA’s fact sheet on lawsuit lending here.
Consumer lawsuit lending is the unregulated practice of loaning money at exorbitant interest rates to plaintiffs who could potentially receive large settlements or judgments. The plaintiff must repay the lender if any settlement or judgment is received at an interest rate that can exceed 200 percent.
This practice targets a vulnerable population, introduces a third-party’s interests into the attorney-client relationship, and slows down and increases the cost of litigation for both plaintiffs and defendants.
“Simply put, the practice of consumer lawsuit lending incentivizes the filing of lawsuits and inserts a third-party’s interest into the attorney-client relationship,” Canary said. “Businesses spend an exorbitant amount of money dealing with lawsuits, which at the end of the day hurts the consumer.
“The presence of a third party increases litigation costs, and slows down the litigation process,” Canary said. “Plaintiffs are forced many times to reject otherwise reasonable settlement offers and seek larger ones or even go to trial to reach an amount high enough to repay their lawsuits lenders.”
Also speaking in favor of the bills was former Atlanta attorney Thurbert Baker, a former Georgia Attorney General and former Georgia state representative.
He said there are cases where lawsuit loans can carry high interest rates to be taken out of any settlement to a plaintiff prior to a plaintiff getting his or her award, for example in a personal injury lawsuit. “We just think if they are going to get into this process and take a loan we don’t think they need to be re-victimized,” Baker said.
Baker, pictured above, appeared at both committees for the U.S. Chamber of Commerce.
You may view the Chamber’s position on lawsuit lending here.
“It’s a top priority of the Chamber,” Baker said. “We think it has a detrimental impact on business and prolongs litigation.”
No votes were taken on the bills.
The Business Council of Alabama is Alabama’s foremost voice for business. The BCA is a non-partisan statewide business association representing the interests and concerns of nearly 1 million working Alabamians through its member companies and its partnership with the Chamber of Commerce Association of Alabama. BCA is Alabama’s exclusive affiliate to the U.S. Chamber of Commerce and the National Association of Manufacturers.