Alliance for Responsible Consumer Legal Funding

Consumer Legal Funding

Why is there a need for Consumer Legal Funding: 62% of Americans can’t cover unexpected expenses

62% of Americans can’t cover unexpected expenses

Kelley Holland@KKelleyHolland CNBC Wednesday, 7 Jan 2015 | 4:00 PM ET

Car accidents, unexpected medical bills, an emergency plumber visit—there are all sorts of events that can interfere with even the best budget plans.

But according to a study released Wednesday, more than 60 percent of Americans do not have enough rainy day funds set aside to deal with even minor calamities.

Just 38 percent of Americans said they could cover an unexpected emergency room visit or even a $500 car repair with cash on hand in a checking or savings account, according to Bankrate, which commissioned the study. About 26 percent would reduce spending on other things, and 28 percent said they would either borrow from family or friends or use credit cards.

“You hate to see so many people who are one relatively modest financial emergency away from a downward spiral,” said Claes Bell, a Bankrate analyst who examined the survey results.

The Bankrate survey, which was conducted in December, did have a silver lining, however. Some 82 percent of the respondents said they keep a budget—though a majority said they do so in their heads or with pen and paper.

Bell speculated that budgeting could be an outgrowth of the financial crisis and the recession. “People are more interested in keeping a household budget and keeping their expenses under control,” he said.

He’s also hopeful that Americans could soon start putting more money away for emergencies. “As we see gas prices going down, unemployment falling and wages starting to rise, you may see people having the ability to build up savings,” Bell said.

If they do, it will indicate a shift in the direction of the personal savings rate, which has been declining since June and stood at 4.4 percent in November (the most recent month for which figures are available), according to Federal Reserve data.

Perhaps some additional New Year’s resolutions are in order.

Consumer Legal Funding has nothing to do with Tort Reform

Most of us learn at a young age that you can’t fit a square peg in a round hole. But some people still try.

In this case, the square peg is consumer legal funding, a vital tool that helps working-class people who have likely been in auto accidents that are not their fault pay their everyday bills—car loans, rent, mortgages, utilities—while awaiting fair settlements with insurance companies. The round hole is tort reform.

Tort reform efforts in the U.S. have always focused on issues like outsized awards and unreliable evidence. Now, however, with the backing of the multibillion dollar insurance lobby, the U.S. Chamber of Commerce is using tort reform as a smokescreen to advance an agenda that has nothing to do with justice or the U.S. business climate.

In every corner of the country—from Arizona, Indiana, Missouri, to New Jersey, and Arkansas—the Chamber and Big Insurance are lobbying to regulate consumer legal funding so harshly it would eliminate the product and leave thousands of people without a crucial option—sometimes their last good option—for keeping their heads above water during tough financial times.

These efforts are in the name of tort reform, but legal funding has nothing to do with tort reform. Why?

First, legal funding involves only preexisting cases. Second, the vast majority of consumer legal funding cases are about auto accidents. They are light years away from the multi-million dollar, multiple-plaintiff class action suits that have sparked calls for tort reform. The average funding amount given to customers of the largest consumer legal funding company is $1,700. And none of the funding ever goes to attorney fees, court costs, or any other costs of litigation. People use the funds to keep their lives afloat until a fair settlement is reached.

Legal funding has been proven time and again to actually serve justice and the court system. In Arizona, for example, personal injury claims have decreased since legal funding companies began doing business there. And a study from Vanderbilt University found that, if anything, legal funding speeds up fair settlements.

Finally, the last thing legal funders want to do is provide funding to people with frivolous lawsuits. Legal funding companies are paid only when cases are successfully settled. They have an economic incentive to steer clear of frivolous lawsuits.

So if it’s clear legal funding has nothing to do with tort reform, then why is Big Insurance claiming it does? Because big insurance companies have an economic incentive to pay as little as possible on claims. Their profits go up when cash-strapped accident victims settle quickly for far less than the fair value of their claims.

The U.S. Chamber of Commerce and Big Insurance can keep trying, but this square peg of consumer legal funding will never fit in the round hole of tort reform. Tort reform has absolutely nothing to do depriving working class Americans the ability to pay their home, grocery, car, and light bills when they’ve been injured.

By Eric Schuller President, Alliance for Responsible Consumer Legal Funding

AZ Senate sides with big insurance over the little guy. Arizonans look to House to stand up for them

The Arizona Senate, today, took a step to eliminate 3 principles fundamental to the liberties of Arizonans: a free market economy, the protection of personal property rights, and access to a fair justice system. The Senate advanced SB 1403, a bill that would cripple the availability of consumer legal funding, a product Arizonans have used to level the playing field against behemoth insurance companies who often offer accident victims far less than the fair value of actual damages.

The supporters of SB 1403 claim the bill will make a better legal environment. They claim it is “tort reform.” Neither is true.

The truth is that SB 1403 benefits only one very specific group: large insurance companies who seek to protect their “claims profit.” Consumers are the ones who are getting tossed overboard.

4 states have taken common sense steps to regulate the consumer legal funding industry in a way that ensures people have access to an important financial tool. We urge lawmakers in the House to reject the pressures of the lobbyist hired by the Insurance industry and follow the path that allows consumer legal funding to assist those who need it most, instead of one that erodes Arizona’s principles of justice and economic freedom.

We salute the Indiana Senate for passage of SB 373

In a bipartisan and overwhelming 47-2 vote, the Indiana Senate approved SB 373, a bill championed by Senator Randall Head (R-Logansport) along with co-sponsor Senator Michael Young (R-Indianapolis) and Senator Greg Taylor (D-Indianapolis).

SB 373 creates a robust set of consumer protections for Indiana consumers who use consumer legal funding to help make ends meet, and pay day-to-day expenses, while waiting for legal claims to be resolved.

We applaud Indiana Senators for their near-unanimous support of this legislation. They have sent a strong signal about the importance of consumer legal funding as a life-raft for people to keep things afloat during tough times. We urge fellow lawmakers in the Indiana House to follow the Senate’s lead down a common sense path that legislatures in Ohio, Nebraska, Maine and Oklahoma arrived at in crafting appropriate regulation of the consumer legal funding industry.

We again thank Senators Head, Young and Taylor, and the full Senate for its support of SB 373 that greatly benefits the people of Indiana.

Insurance Legislators Take Best Course of Action to Preserve Consumer Access to Legal Funding

NCOIL members reject model legislation that would deny free market choice for consumers seeking legal funding assistance

After three and a half years of exhaustive deliberations and vigorous debate, state legislators convening for the 2014 Annual Meeting of the National Conference of Insurance Legislators (NCOIL) in San Francisco determined not to endorse any model legislation pertaining to consumer legal funding.

The Alliance for Responsible Consumer Legal Funding (ARC) applauds the outcome, as it would have been an unprecedented effort to recommend government-mandated pricing restrictions that would directly interfere with a consumer’s right to determine the best type of transaction for him or her.
“We are pleased that NCOIL rejected legislative models that would have encouraged states to limit the economic liberties of their citizens and interfere with their right to contract. Fortunately, the overt lobbying efforts of the insurance industry to deny access to this funding option for working-class consumers were rejected,” said Eric Schuller, President of ARC. “Regulators have seen through this thinly veiled attempt to tilt the playing field of claims payments away from consumers and in favor of defendants liable for damages. These are encouraging steps away from the desire of giant insurance companies who want to monopolize the valuation of consumers’ claims, and towards competitive market solutions that ensure anyone with a claim can access legal funding.”
Effective market-based regulation of the Consumer Legal Funding industry already exists in Maine, Ohio, Nebraska and Oklahoma. Similarly, New York’s attorney general has entered into an agreement to properly regulate the industry—recognizing that this product is an asset purchase, not a loan.
Despite these important precedents, the Tennessee legislature enacted a law earlier this year with onerous rate caps. Backed by the multibillion-dollar insurance lobby—who themselves adamantly oppose government-mandated price caps on their own products—the law forced legal funding companies out of the state and left Tennessee consumers without the option for Consumer Legal Funding.
“As legislators continue to examine how to best serve their constituents who seek consumer legal funding, they have two clear paths: One seeks economic security for families and communities in need of financing options; the other seeks to secure the status quo for insurance companies looking to maximize their profits,” said Dan Cleary of Provident Litigation Funding, Inc., a Tennessee-based Consumer Legal Funding company. “The wrong path was taken in Tennessee and the impact was immediate.”
“For the sake of tens of thousands of hardworking Americans who face the painful choice between paying rent, buying groceries, getting medical care or settling a claim for pennies on the dollar because insurance companies can wait them out, let’s hope our elected leaders – like those represented in NCOIL – will have the wisdom to put consumers first and maintain Consumer Legal Funding as an option for those who need it,” said Ralph Shayne, CEO of Oasis Legal Finance.
About the Alliance for Responsible Consumer Legal Funding (ARC)
The Alliance for Responsible Consumer Legal Funding (ARC) advocates on behalf of a coalition of legal funding providers that include the national and state level market leaders to ensure the proper regulation of the legal funding industry in the United States. ARC aims to accomplish this mission by promoting industry best practices and working at the state and federal levels with legislators and regulators to develop a framework that provides a high degree of consumer protection—including robust licensing and disclosure requirements – and protects the rights of consumers to access this economic option by embracing free market principles. http://www.arclegalfunding.org

Preserving a vital service that Consumers rely upon in #Louisiana.

Working Louisianans spend a majority of their time away from home.  Earning an honest wage to help pay for such daily necessities as food, housing and transportation.  As times are changing and inflation is rising, the dollar has never been stretched so thin.

Kirk from Breaux Bridge, Louisiana was a hardworking Louisianan who did his job well and wanted what was best for his family.  He is the type of person who clocks in everyday knowing that the money he earns will help provide for the people he cares about most.  Kirk had also been frugal over the last several years and had built a little cushion in his bank account, allowing for some breathing room.  

Unfortunately for Kirk, he was recently involved in an automobile accident.  The accident left Kirk injured enough where he couldn’t work for a long period of time, leaving him without a consistent paycheck and his emergency savings drained.  Kirk was stuck and in need of a little financial assistance while he “patiently” waited for the insurance company to settle his injury claim.  

After researching several different financial options, Kirk decided to go with a consumer legal funding company.  Kirk felt the most comfortable with this financial option because he would not incur any further debt, the terms were clearly presented to him upon signing the agreement and he would receive just enough funds to help pay for the bills that had piled up over the past couple of months.

“Consumer legal funding has helped me and family during this troubling time,” Said Kirk.”

Unfortunately for Kirk and the thousands of citizens who rely on this vital service in Louisiana, the U.S. Chamber of Commerce is on a misinformation campaign to demonize the industry and eliminate its existence from the state.  Campaigning for their largest client, the billion-dollar insurance industry, they have attempted to severely regulate the consumer legal funding industry into extinction through legislative measures around the country, including Louisiana.

So why is Washington D.C.’s wealthiest special interest group so involved with this issue?  It is simple, as consumer legal funding is a service that helps provide an equal footing to consumers who find themselves (we have all been there) frustrated and in a struggle with an insurance company for a fair settlement.  Where insurance companies were once able to pressure consumers who didn’t have the financial means to withstand any sort of long drawn out battle and offering less then fair market settlements to consumers.  Consumer legal funding bridged that gap between the time an accident occurred and when a consumer could finalize their settlement in a fair manner with the insurance corporation.

While decision-makers in Louisiana consider a series of bills in the state house addressing this issue, I hope they choose to listen to the consumer legal funding industry and the thousands of constituents who rely on this product.  Preserving a service that has become a lifeline to so many has never been more important. 

U.S. Chamber sets its Sights on Texas for Anti-Business Regulations in 2015

In a recet article posted in the Waco Tribune,  Jill Shackelford, Chairwoman of the special interest-funded outfit called “ Citizens Against Lawsuit Abuse of Central Texas” authored a misleading column about the consumer legal funding industry.

This should be a warning to the thousands of consumers in Texas that the U.S. Chamber of Commere and the mega insurance companies they represent are preparing to eliminate, through anti-business legislation, a service that has become so vital to so many in Texas. 

In a tactic that has failed in so many other states, they will try and misinform legislators in Austin about what the consumer legal funding industry is and does. By disguising their initiatives as consumer friendly and claiming to help protect the everyday citizen of Texas, it would be easy for members in Austin to jump on board such a cause.  If you look closer, however, you will see a powerful insurance industry trying to legislate its way to more power.   As members in the Texas legislature gearing up for the 84th session in 2015, look carefully at who is behind this push and consider the impact this type of anti-business message would have  on the consumers who rely on this product everyday.

Consumer legal funding allows citizens like Harold from Waco, Texas who was injured in an automobile accident, unable to work due to the accident, to have a financial lifeline.

After exploring other financial options, Harold made the decision that consumer legal funding was the best fit for his situation.  Where other financial options carried the possibility of future debt, consumer legal funding was the option that did not create any further debt and was a fully disclosed agreement Harold trusted.

“Because of consumer legal funding, I was able to pay off all my past-due bills.”

Unfortunately for the thousands of citizens of Texas, the U.S. Chamber of Commerce and the handful of mega insurance corporations they represent have been traveling around the country spending millions of dollars to try and get rid of the consumer legal funding industry.

Luckily for Harold and the many others who rely on the services of consumer legal funding in Texas, legislators in other states have stood up to the U.S. Chamber and large Insurance corporations and have recognized the important role this industry has played in helping those who need it most. 

In 2015, it will be Austin’s turn to stand up to these billion-dollar entities, choosing the Texas consumer over big insurance.

Warning: Deep-pocketed Special Interests Tip Their Hand in Illinois

In recent weeks, a special interest-funded outfit called “Illinois Lawsuit Abuse Watch” has started placing misleading editorials in Illinois-based newspapers about the consumer legal funding industry.

This should be a warning to all Illinois consumers that having been turned back in state legislature after state legislature around the country, the moneyed Washington, DC interests have turned their sights to the Land of Lincoln.

The next move in their playbook will be to misinform legislators in Springfield about what the consumer legal funding industry is and does. By disguising their legislation as consumer friendly and claiming to be designed to help protect the everyday citizen of Illinois, it would be easy for members in Springfield to jump on board such legislation.  If you look closer, however, a picture starts to emerge of a very powerful entitiy trying to legislate its way to more power.   I urge members to look carefully at who is behind this push for such legislation and to consider the impact this type of legislation would have not only on the hundreds of jobs associated with the industry but the thousands of consumers who rely on this product everyday.

For years, the services of consumer legal funding has helped families from all across Illinois cope with debilitating injuries, caused at no fault of their own, usually from an auto accident.  These accidents often leave hardworking citizens out of a job, without a full paycheck, and unable to pay for everyday necessities such as rent, utilities, medical bills and food.  The ability of consumer legal funding to provide a, non-recourse, fully disclosed funding options is vital for these injured consumers to get back onto their feet, and to continue to pursue a full and fair settlement with their insurance company.

Consumer legal funding allows citizens like Fred from Holland, Illinois who was hit by another vehicle, injured from the accident, unable to work and instantly thrust into an unfavorable situation, to have a financial lifeline.

After consulting with his lawyer and exploring other financial options, Fred decided that consumer legal funding was the best fit for his situation.  He knew this was an option that wouldn’t create any further debt and was a fully disclosed, non-recourse agreement.

“Because of consumer legal funding, I was able to pay some of my bills and buy groceries for my family.” 

Unfortunately for Fred and thousands of other citizens of Illinois, the U.S. Chamber and the handful of mega corporations they represent, would love nothing more then for this industry to disappear.  Making the consumer weaker and the mega corporations bottom-lines stronger.

So when it comes to protecting the consumer, who do you believe?  The consumer legal funding industry, which was created for the sole purpose of helping those who need it most?  Or the U.S. Chamber of Commerce, an advocacy organization in Washington, D.C. that represents only the largest corporations in this country and their financial interests?

I think the answer is simple and I urge those in Springfield to stand up to special interests and help protect the vital services consumer legal funding provides to so many in Illinois.

HB-925 attempts to eliminate consumer legal funding industry from #Louisiana, leaving thousands of consumers in the dust.

As the debate begins on HB-925, an anti-business bill that aims to heavily regulate the consumer legal funding industry, members should consider the impact this bill would have not only on the industry but on the many consumers who rely on this product.  HB-925 is laced with toxic and devastating anti-free-market price controls.  Taking with it stranding the thousands of working class consumers who have come to rely on its services every day.  

For years, the services of consumer legal funding has helped families from all across Louisiana cope with debilitating injuries, caused at no fault of their own, usually from an auto accident.  These accidents often leave hardworking citizens out of a job, without a full paycheck, and unable to pay for everyday necessities such as rent, utilities, medical bills and food.  The ability of consumer legal funding to provide, debt-free, non-recourse, fully disclosed funding agreements is vital for these injured consumers to get back onto their feet, and to continue to pursue a full and fair settlement with their insurance company.

Consumer legal funding allowed citizens like Carla from Ponchatoula, Louisiana and Genora from Eunice, Louisiana to finally stand up to large pocketed insurance companies and fight for what they deserved, a fair settlement on their injury claims.  They no longer had to worry about their daily living expenses.

Carla from Ponchatoula said it best after her accident, and after use of a consumer legal funding company. “[Consumer legal funding] helped me survive until my life straightened out, thank you.”

Genora from Eunice was also thankful for the services consumer legal funding provided to her and her family. “[Consumer legal funding] has been very helpful during my time of financial need.” 

Who is behind the push to pass such legislation in the Louisiana General Assembly to eliminate an entire industry from existence affecting so many consumers who rely on this vital service?

Out-of-state insurance conglomerates, and the Washington, D.C. based advocacy group, the U.S. Chamber of Commerce, of course.  Large Insurance corporations view the consumer legal funding industry as a direct threat to maximizing their already enormous bottoms lines, and look to gain greatly from this legislation.  Traditionally an insurance company would use a consumer’s accident and lack of financial security to force less-than-market-rate settlements.  Consumer legal funding bridges the financial gap from the time an accident occurs until a consumer has a chance to fairly settle their injury claim. Consumer legal funding gives consumers the strength to hang on in court proceedings or settlement negotiations despite having limited bargaining power against large insurance interests.

Although these bills will be sold as consumer-friendly and pro-business by the Insurance industry and the U.S. Chamber of Commerce, we ask members in the House of Representatives to recognize HB-925 for what it really is, an anti-free market, anti-consumer, pro-insurance, power grab bill. 

For an industry, like insurance, which consistently marks their products up at a 200% – 400% profit margin, it is hard to take them serious when they say they are trying to protect the consumer in the legislation they are pushing.  

U.S. Chamber on pace to spend over $100 Million dollars on Lobbying Efforts in 2014

The U.S. Chamber of Commerce spent over $25 million dollars on lobbying efforts in the first quarter of 2014 and is on pace to spend well over $100 million dollars in total by the end of the year.  Of the $25 million dollars spent this quarter, the Institute for Legal Reform spent $6.2 million dollars. 

The Institute for Legal Reform, a lobbying arm of the U.S. Chamber of Commerce has listed the consumer legal funding industry as its number one target for the 2014 state legislative season.  With its main objective of passing legislation containing crippling price control measures as well as other anti-business regulations onto the Consumer Legal Funding industry in states all across the country. 

These large sums of money being spent by the U.S. Chamber of Commerce wasn’t more evident than their fight against the consumer legal funding industry in Tennessee a couple weeks ago.  There, the U.S. Chamber of Commerce flooded Nashville with several dozen Washington D.C. lobbyist, hijacked the legislative process and ultimately pushed their corrosive anti-consumer legal funding bill into final passage.  Sealing the fate of the consumer legal funding industry, which will begin exiting Tennessee starting in July of this year.  

Now more then ever it is time to stand up to the U.S. Chamber of Commerce and the handful of mega corporations they represent to preserve the vital services of the consumer legal funding industry. 

For the story published in The Hill about the U.S. Chambers outrageous spending, click here: http://bit.ly/1tt9pio.