LAWSUIT LOANS- AN EVOLVING INDUSTRY
By: Bob Kominsky CEO ADVANCE CASE LOANS LLC


The lawsuit loan industry, also know as litigation financing, is one of the fastest growing industries in the legal world today. It has grown to the point where if you are a personal injury attorney you have clients calling inquiring about them and you are getting numerous requests daily to complete forms from these companies. This article will help you understand the industry.
The lawsuit loan industry was born in the late 90’s and before it existed the client would ask the attorney if they could loan or “advance” the client money until they received their settlement. As it stands today, the ethical rules of the Illinois Supreme Court Section 1.8(b) specifically state that an attorney cannot advance money to a client UNLESS it is for court costs associated with their case, not living expenses. Through the years there have been several attorneys that have been reprimanded, suspended or barred from the practice of law for violating these ethical rules.
When the client gets in an accident and cannot work, they are normally living paycheck to paycheck and have no way of paying their bills to live. The attorney wants to maximize the settlement to the client, but the insurance company and defense attorney will not pay the reasonable settlement value usually until the case is ready for trial. Many clients cannot wait that long and will want to settle their case for less than its full value. This is where lawsuit loans can be beneficial. ISBA opinion 92-9 states “it IS ethical for an attorney to suggest a loan agreement with a particular financial institution.”
Approximately ten years ago the litigation financing industry evolved in order to meet this need in the market. There are different types of companies within the industry. One type of company does not have a license in the State of Illinois so they call their product purchase agreements, funding agreements or some other title which does not reference a “loan” as they are not loans. These companies may violate state usury laws by charging in excess of the allowed state interest rates, so they must call their product something other than a loan.
The other type of company is licensed by the State of Illinois Department of Financial Institutions (DFI). A licensed company calls the transaction a loan which includes a promissory note and a truth-in-lending statement. By getting a license with DFI, you are allowed to charge a rate that the parties agree to without violating usury laws. In either instance, the company advancing the money is paid back at the conclusion of the case when it is either settled or there is an award. It is typically the attorneys’ responsibility to pay back the loan at the conclusion of the case as they would other liens. The difference in the two distinct entities is that the licensed company must comply with all DFI regulations along with the consumer laws of Illinois. The State of Illinois monitors all licensed companies and if they are not in compliance they can be fined, censured or have their license suspended. The unlicensed company is not subject to the jurisdiction of DFI and may not be following the consumer laws.
Now that we have differentiated licensed from unlicensed companies, we will discuss different types of loan products. Some companies charge fixed rate interest but most have compounding interest on their loans. What this means is that the interest is added to the principal which then resets the principal the interest is based on. The interest rate will remain the same, but with the increased principal the amount owed can spiral out of control. This “compounding” can occur monthly or annually, but the principal amount increases each time a compounding event occurs. Unlicensed companies are not subject to Illinois law in terms of what they can charge, so they can also add fees not authorized by DFI.
At the time of the loan the attorney will generally sign some form of acknowledgement that the client has taken out a loan and wishes to have it paid from the proceeds of their settlement or award. Lawsuit loans are typically paid at the conclusion of the case along with other liens. Upon settlement, the attorney contacts the loan company to get a payoff amount and pay the company at that time. What happens if the client owes more than their settlement? This is an issue that the attorney will face as more companies get into the industry and loan amounts in excess of the value of the case.
The lawsuit loan, or litigation finance industry, is growing and with the condition of our economy the need gets greater. Ethically it is permissible for the attorney to assist in getting the client a loan so the personal injury attorney will have to adapt their practice accordingly. At the same time, the attorney must keep in mind the ethical considerations of ISBA opinion 92-9, Supreme Court Rule 1.8(B) as well as common sense in dealing with different types of companies.

Oak Brook, IL - This past Friday the Illinois Trial Lawyers Association hosted its annual golf outing at the Marriott Golf Resort in Oak Brook, IL. Judges, attorneys and vendors made their way out on a beautiful day to enjoy some pleasure mixed in with business.

CHICAGO - The dreaded Conficker virus, that was tabbed to cause mass destruction across the computer landscape, has seemed to have been exaggerated. At least here at Advance Case Loans we have been completely un-effected by the virus. Using the security that we pride ourselves on and the privacy that our clients treasure, we have had zero intrusions into our systems.

As the leader in lawsuit loans, aka litigation finance, we truly pride ourselves on keeping our clients and their information completely private. In a world of financial instability, the last thing anyone needs is an invasion of privacy. This is why we work as hard as possible to keep everything as safe and secure as possible.

SPRINGFIELD, ILL - The continuing battle of payday loans has begun to escalate once again.
As an industry with annual interest rates creeping into the 400 percent range, legislators are looking to pass a bill that will cap annual interest rates statewide.

The new bill would not only cap the small consumer loans, but it would eliminate the fees that most lenders are currently charging.

Payday loan owners argue this point by stating that capping a short-term loan would be similar to capping the price on a cup of coffee or limiting hotel nightly fees.

President of PLS Financial Services Inc., Bob Wolfberg, believes there are two different types of loans. "For longer term debt there's certain types of debt that's better," he said, "and for shorter term debt there's certain types of debt that's better."

PLS will be working with the Illinois Department of Financial Institutions very closely during this process and hopes to have their concerns heard.

This bill would not affect the litigation finance industry, who's annual percentage rate is closer to the 50-60 percent range.

Advance Case Loans, which is a licensed litigation financing institution, offers a strictly fixed rate loan with no compounding of interest. This program helps individuals in the midst of a legal dispute that involves being involved in a car accident, slip and fall or injured at work.

If you can't pay your bills and are in the middle of a lawsuit it is much, MUCH more affordable to go to Advance Case Loans than to go to a payday loan store.

FOX LAKE - Advance Case Loans announced today that they will be donating new toys to the Fox Lake-Round Lake area Rotary Club for the George Watson Memorial Rotary Children's Party.

Toys for Tots has been scrambling to acquire toys for the 500 children due to a miscommunication with the U.S. Marine Corps, who used to deliver the toys to children, but no longer do so.

"We have been overwhelmed with calls from people who want to help," Grant Township Supervisor Kay Starostovic said.

Toys for Tots in Lake County has collected more than 15,000 toys to this point.

High School students from the area are volunteering to help pass the toys out to the needy children. They have been passing out things like; toys, underwear, warm winter clothing and stockings for the kids to hang.

Advance Case Loans has begun to establish themselves in the community with donations and charitable contributions throughout the year.

"We really appreciate that we are in the position to help out the less fortunate," said Bob Kominsky, President of Advance Case Loans. "We look forward to helping in any way we can for years to come."

Advance Case Loans is a litigation funding company, also known as lawsuit loans, based out of Chicago, Illinios. They are licensed by the Illinois Department of Financial Institutions and are a part of the Illinois Trial Lawyers Association and Workers' Compensation Lawyers Association.