In August 2008, legislation codifying the right of Ohio citizens to receive “non-recourse civil litigation advances” or legal finance advances took effect. Legal financing, also known as litigation financing, or legal funding, enables lawsuit plaintiffs to receive advances on their lawsuit settlements or awards. Previously, the Rancman v. Interim Settlement Funding case had led some commentators to doubt whether lawsuit funding was legal in the state of Ohio.
The State of Ohio defines “non-recourse civil litigation advance” as:
“a transaction in which a company makes a cash advance payment to a consumer who has a pending civil claim or action in exchange for an amount out of the proceeds of any realized settlement, judgment or verdict the consumer may receive in the civil lawsuit” http://www.legislature.state.oh.us/bills.cfm?ID=127_HB_248
A legal funding contract must include the following (emphasis added):
The Ohio legislation provides safeguards to the consumer seeking legal funding while enabling litigants to receive legal funding advances should they deem it in their interest after full disclosure has been made. The best litigation funding companies already complied with the requirements of the Ohio law. For example, LawCash provides the following in its list of principles to which it promises to adhere:
“At LawCash, we adhere to the following principles:
In addition, the Ohio litigation in some ways mirrors the “best practices” set forth by ALFA (The American Legal Finance Association):
Therefore, the Ohio law merely sets the bar where the premiere lawsuit funding companies had already set it; high and fairly to the consumer. Those in other states should take note and make sure that they use lawsuit funding companies — such as LawCash — who provide full disclosure and cancellation policies, up-front.