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Some firms have charged successful interest rates exceeding 100 percent a year, but the company generally operates beyond the reach of funds lending laws and has largely escaped the sort of hostile consideration that has been directed at, for instance, the payday loan market and its alleged "predatory lending." However, that could be altering. New York Lawyer Common Eliot Spitzer has reached settlements calling for clearer disclosure of charges from at least ten litigation-cash-advance firms, including 1 based in New Jersey which billed a client $19,000 for a money advance of $3,000 two and a half years earlier. (This organization later accepted a smaller sum.)
Sector publications have pointed out that we should not assume that the legal finance company is in fact pocketing an extraordinarily high general return on its cash advances because in instances exactly where client/plaintiffs obtain neither a verdict nor a settlement it will lose the cash. But this when yet again suggests a near parallel with sub prime lenders, many of which also must write off a nontrivial share of debt holdings as un-collectable.
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