Plaintiffs’ Suit Against Litigation Funding Firms Dismissed
Personal injury plaintiffs filed a putative class action against various litigation-funding companies alleging violations of the “Payday Lending Act” (PLA) and the Industrial Loan Act concerning money transactions to pay litigants' personal expenses during the pendency of their personal injury actions. The clients alleged they were charged exorbitant interest in the form of a “monthly use fee” and other fees amounting to an annual rate of 80%. The Georgia Supreme Court disagreed concluding the transactions were not really “loans” under either Act because the plaintiffs did not have to pay them back if they did not recover. The court considered them more akin to high risk investments with matching rates of return.