Having previously outlawed legal financing altogether, Ohio has now leapfrogged most other states by introducing a strong regulatory framework that ensures that consumers are protected.
Columbus, OH (PRWEB) June 4, 2008
Oasis Legal Finance announced today that it intends to offer legal funding to consumers in Ohio this August.
On May 28, 2008, Ohio Governor Ted Strickland signed into law House Bill 248, creating a regulatory system under which legal finance companies can operate in Ohio. The bill had unanimously passed both the Ohio House and Senate.
Legal Funding Available in All 50 States:
The bill effectively overturns Ohio's prior policy of prohibiting legal finance companies from operating in the state. Ohio, which had been the only state in the country to explicitly forbid legal financing, joins Maine as the second state to formally regulate the legal financing industry through recently enacted statutes.
Industry Experts Applaud Ohio's New Regulatory Framework for Legal Funding:
"This is a huge win for the legal financing industry, but more so for the people of Ohio who now have access to legal funding in times of need," said Gary Chodes, CEO of Oasis Legal Finance, who also testified before the Ohio legislature on behalf of the industry. "Ohio has done this in the right way, creating a legal framework that protects consumers while simultaneously recognizing that injured parties in the midst of a lawsuit often need financial relief to pay for basic living expenses while they await closure on their cases."
Betty Montgomery, former Ohio Attorney General and Ohio State Auditor, said, "A well-regulated legal finance market is a very competitive, consumer friendly thing. This is a new market where firms are trying to create options for consumers and meet an acute need."
Montgomery also noted, "The Ohio bill that passed has a number of important elements that will protect consumers, most notably the requirement that the consumer's lawyer must be involved in the process and that there be full disclosure on all the terms of the legal funding advance."
Helen Mac Murray, an Ohio attorney and former chief of the Consumer Protection Section of the Ohio Attorney General's office, also lauded the bill as being consumer friendly.
"With so many consumers entangled in the legal process, it's important that Ohio offers alternatives to those who are experiencing financial hardships," said Mac Murray, who is a recognized national speaker on consumer regulatory issues. "Having previously outlawed legal financing altogether, Ohio has now leapfrogged most other states by introducing a strong regulatory framework that ensures that consumers are protected."
The Legal Financing Industry:
Legal financing, also referred to as legal funding or pre-settlement funding, is a financial service that provides assistance for basic living expenses to consumers involved in legal claims. Typically, lawsuits can span months or years before settlements are awarded. In many instances, while their cases are pending, consumers do not have sufficient funds to pay rent or mortgage payments, purchase gas, buy food for their families, or pay off medical debts.
Legal financing companies provide cash advances for living expenses to consumers seeking justice in the courts who are in critical need of funding. The advances provided are not loans. Rather, they are 'non-recourse,' meaning the advance only needs to be repaid if the consumer wins his or her case. Legal financing firms take significant risks and can lose monies advanced when a funded consumer loses or abandons a court case.
Legal financing cannot be used for legal expenses, and is only available to consumers who are already entangled in the legal system and have engaged an attorney. Once legal funding is provided to the consumer, the legal financing firm has no subsequent input relative to the consumer's case or settlement negotiation.
Advance amounts are determined based on an analysis of the strength of a claim, the need of the consumer, and the input and approval of the consumer's attorney.
HB 248 Requirements:
The new Ohio regulation is geared to protect consumers from legal financing companies that do not follow industry best practices. To ensure this, key stipulations of the bill include, but are not limited to, the following:
- Contracts may be canceled by the consumer within five business days without penalty;
- The total dollar advance and a breakdown of fees, including the annualized rate of return, must be clearly disclosed in the contracts;
- To be valid, the legal financing contract requires written acknowledgment by the attorney representing the consumer in the civil action or claim, specifying that the attorney has reviewed the contract and all costs and fees have been disclosed;
- For French and Spanish-speaking consumers, contracts will be available in their primary language; and
- As part of the contract, the legal funding company will agree that it has no right to make any decisions involving the claim and its settlement.
Chodes estimates that between two and five percent of auto accident claimants in Ohio will eventually seek legal funding. Workers compensation and other personal injury cases are also eligible for funding.
"A proto-typical recipient of an advance from Oasis is a working mom - a single parent head-of-household living paycheck to paycheck," said Chodes. "To them, a cash advance can mean a whole lot. It's a lifesaver."
The legal financing industry's best practices are defined by the American Legal Finance Association (ALFA). Oasis, along with 14 other legal funding firms, created ALFA in 2004. All ALFA members agree to adhere to ALFA's best practices as part of their membership. ALFA members are estimated to account for 90 percent of industry activity.
About Oasis Legal Finance:
Oasis Legal Finance, LLC, headquartered in Northbrook, IL, is the nation's largest legal funding source for consumers and is also a leading underwriter of legal funding for commercial litigation. Oasis is a driving force in the regulatory and legislative areas of the legal industry. Its executives frequently testify in front of industry and regulatory bodies.
For more information, please visit http://www.oasislegal.com. Oasis can be contacted by phone at 1-877-333-6675.