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WMC Supports Common-Sense Consumer Protections for Litigation Advance Payments

WMC Director of Tax, Transportation & Legal Affairs Evan Umpir, testified in support of Assembly Bill 464, a bill that would establish common-sense consumer protections for advance-payment transactions in litigation. “Non-recourse civil litigation advance payments” are transactions where a plaintiff-consumer receives a sum of money from a financier that is repayable from the proceeds of a settlement or judgment in addition to finance charges, which can sometimes be greater than 200% of the amount advanced. This is concerning because these unregulated transactions can leave plaintiffs with little or no money left from a settlement or judgment and affect the length of litigation, costing both plaintiffs and defendants.

These transactions can artificially prolong litigation and waste court resources if a plaintiff feels pressure to pursue a litigation strategy based on concerns of loan repayment, costing defendants money defending the claim and the court precious time. AB 464 institutes common-sense consumer protections that allow these transactions, but cap finance charges at the equivalent of the prime percentage rate plus 10% and ensure that consumers are not required to pay back the advance payment if they do not win the case. This bill also ensures that plaintiffs do not need to repay the advance payment beyond the available proceeds from a settlement or judgment.

Click here to read WMC’s full testimony.




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