“Lawsuit Finance Contracts Are Loans, Colorado Supreme Court Rules”

Forbes reports:

The Colorado Supreme Court has ruled that litigation-finance contracts — non-recourse loans to consumers that are repayable only if they win their case — are indeed loans under that state’s consumer finance laws, making it harder for high-interest lawsuit lenders to operate in the state.

The decision [yesterday] by Colorado’s highest court  upholds an appeals court decision against Oasis Legal Finance, believed to be the largest firm in the consumer end of the litigation-finance industry. It’s a loss for lawsuit lenders and supporters who say the industry helps equalize the bargaining power between injured consumers and insurance companies, who can use delays and other tactics to pressure plaintiffs into settling for less. But it’s a victory for the U.S. Chamber, which opposes lawsuit lending because it believes the loans both stimulate more litigation and inspire consumers to hold out for more money in order to repay loans that frequently have interest rates above 40% a year.

The full article, with a link to the court's opinion, is here.

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