New York, N.Y. (December 23, 2020) - In 2019, the first detailed analysis of the commercial litigation finance industry in the United States was released, showing a staggering $2.3 billion industry growth measured in just one year. The consumer-litigation portion of that industry deals primarily with personal injury claims and small claims in which a plaintiff is typically not well-funded. New York has become a hub for this industry, which poses great challenges to defending personal injury claims, as the use of such funding in lawsuits is far from transparent to defendants and the courts.
As a result of this booming multibillion-dollar industry, Lewis Brisbois' trial attorneys have been making regular demands for litigation funding information from plaintiffs, including the agreements themselves, applications filed by the plaintiff to the funding company, and the amount of the liens. The litigation funding amount taken by a plaintiff exponentially increases the potential settlement value of a case depending on the amount of the lien, which is compounded by exorbitant interest rates. This drives up the global settlement value that a plaintiff is willing to accept, and makes it increasingly difficult for defense firms to settle the case early on in litigation or at a reasonable value prior to trial.
In New York, demands for litigation funding made by defendants in personal injury actions are often refused by plaintiffs and result in uphill battles to disclosure on an issue with minimally published precedent.
A critical resource in determining whether a plaintiff has a litigation funding loan is the New York Department of State. Any time that a plaintiff takes out a law loan, the funding company must file a UCC lien with the New York Department of State. While this filing does not provide the amount of the lien, it does provide the date the lien was taken out, which is helpful in determining whether the loan is related to a plaintiff's medical treatment in a particular action. One can also view the filing statement, which provides the debtor's name and address, and the secured party's name and address.
This resource is also vital for confirming any litigation funding information provided by a plaintiff. Often times, plaintiff's counsel simply denies the existence of any litigation funding, and this affords defendants an opportunity to contest the existence of litigation funding, and grounds to seek the disclosure of the amount of said funding and the underlying agreement through court intervention. The UCC filing, which demonstrates that a lien exists, may also be useful to the defense at trial during cross-examination of the plaintiff and his or her treating physicians.
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