Personal injury victims often wait for years before their claims are settled or their cases go to trial. In some cases, a large jury verdict may be appealed resulting in more delays that could take years. In the meantime, victims are unable to return to their normal jobs or to any work at all. Insurance may not cover all their costs and many face judgments or bankruptcy.
Legal funding companies offer to pay injury victims with viable claims certain sums based upon an estimate of what their claims are worth. They charge high interest rates and wait to collect when the claim settles or results in a verdict. If the settlement is lower than what is owed the companies, the injured victims still must pay, unless they lose at trial.
Nevada lawmakers wish to regulate these companies that some victims label as loan sharks. Some legislators introduced stories of people who benefitted from funds received from these companies, while other told of horror stories of companies charging interest rates as high as 215 percent or charging $1 million in fees despite a settlement of $400,000.
Proposed legislation would cap fees at certain amounts. Nevada has no general limit on interest rates. Depending on what the final bill contains, some state officials claim that legal funding companies would flock to the state and prey on helpless victims or use the state’s lax laws to lend funds to plaintiffs in other states.