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Litigation finance companies skirt usury laws for great profit

Billy Shields of the Daily Business Review exposed the growing business of litigation finance. These companies offer plaintiffs an advance on pending legal settlements, but at great cost. "The debate over litigation finance company begins over whether they are making a loan or investing in cases. Because courts have ruled their advances are not loans, the companies can charge virtually any percentage of a settlement or verdict in exchange for a cash advance without violating usury laws." Usury laws limit the amount of interest that can be charged on a loan, but to not apply to the litigation finance advances. Currently, these finance companies are almost entirely unregulated, leaving litigants vulnerable to excessive fees and charges.

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